Representative image.
The Nifty50 reversed more than half of its previous day’s gains and formed a bearish candle which, to some extent, resembles a Bearish Engulfing kind of pattern formation on the daily charts on January 10, indicating a negative mood. But the index strongly defended 17,800, the sacrosanct support zone area.
Hence if the said support area gets broken, then the index can extend losses up to 17,700-17,600 levels, whereas the 18,000-18,100 zone is expected to be a critical hurdle for the market, experts said.
Banking & financial services, and technology were the key drivers for the market on the downside.
The Nifty50 opened moderately higher at 18,121 but immediately turned lower, and as the day progressed, it extended correction up to 17,856. The index settled with 187 points losses at 17,914.
“Trading sentiment has been very weak and most of the sluggish external factors are prompting investors to book profit at regular intervals. Technically, the Nifty has formed a long bearish candle on daily charts indicating further weakness from the current levels,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
For bulls, he feels 18,000 would be the key level to watch out for, and above the same, the index could retest the level of 18,100-18,150.
On the flip side, 17,800 would act as a sacrosanct support zone, below which selling pressure is likely to accelerate and drag down the index up to 17,700-17,675, the market expert said.
On the Option front, the maximum Call open interest was seen at 18,000 strike on the weekly basis, followed by 18,100 and 18,200 strikes, which are expected to be crucial resistance areas for the Nifty50, with Call writing at 18,000 strike and then 18,100 strike.
The maximum Put open interest was seen at 17,700 strike, which is likely to be a crucial support for the index, followed by 18,000 strike and 17,900 strike, with Put writing at 17,700 strike, and then 17,900 strike.
The above Option data indicated that the expected trading range for the Nifty50 for coming sessions would be 17,700-18,200 in the near term.
India VIX, which measures the expected volatility in the market, increased significantly by 5.85 percent to 15.51 level, from 14.65 level, making the bulls more uncomfortable at Dalal Street on Tuesday.
Bank Nifty, the key culprit for correction in the market on Tuesday, also opened higher at 42,642 and immediately erased those gains to trade lower for the session and broke the 42,000 mark to hit an intraday low of 41,836. The index showed a bit of recovery in late trade and closed a tad above the 42,000 mark with 568 points losses ahead of a speech by Fed Chair Jerome Powell.
The banking index has formed a long bearish candle which, to some extent, resembles a Bearish Engulfing kind of pattern on the daily charts.
“The banking index faces stiff resistance on the upside at the 43,000 level, where the highest open interest is built up on the Call side,” Kunal Shah, Senior Technical Analyst at LKP Securities said.
He says the downside is supported at 42,000, and if it is breached, further selling pressure will be directed toward the 41,500-41,400 zone, which will be the last line of defence for bulls.
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