Representative image.
The Nifty ended lower for the third straight session on weekly expiry on January 12, as investors seem to have turned cautious ahead of the release of CPI data and December quarter results of IT majors.
The index opened higher at 17,921 and hit an intraday high of 17,946 but squandered the gains in the initial hour of the trade itself to move lower for the rest of the session. The index closed 38 points down at 17,858.
It slipped below its 100-day exponential moving average (DEMA; 17,882) and also the 50 DEMA (18,113) but defended 17,800, the crucial support area.
The index formed a bearish candle on the daily charts with a long lower shadow, indicating support-based buying. Hence, if the Nifty holds 17,800, consolidation is likely to continue but if slips lower, a sharp correction is likely, experts said.
The next support is expected to be 17,500, which is close to 200 DEMA, with the upper side hurdle at 18,000-18,200, experts said.
Oil & gas and banking & financial services, FMCG, metal and pharma stocks pulled the market down.
” The daily RSI (Relative Strength Index) is in a bearish crossover on the daily timeframe, suggesting sluggish momentum,” Rupak De, Senior Technical Analyst, at LKP Securities, said.
In the short term, the trend will likely remain sideways or negative. On the higher end, resistance is at 18,000, on the lower side, support is at 17,750, the market expert said.
The options data indicates that the Nifty may trade in the 17,700-18,100 range in the coming days.
On Options front, the maximum Call open interest was seen at 17,900 strike followed by 18,000 strike, with Call writing at 17,900 strike then 18,000 strike. On the Put side, the maximum open interest was visible at 17,800 strike followed by 17,500 strike, with writing at 17,800 strike then 17,700 strike.
India VIX, which indicates the expected volatility over the next 30 days, was down by 1.03 percent to 15.28 level. Volatility needs to come below 14 for stability to resume, experts said.
Banking index
The Bank Nifty opened flat at 42,239 and slipped to the day’s low of 41,743. It closed 150 points down at 42,082.
The banking index formed a bearish candle on the daily scale with a longer lower shadow, indicating support-based buying.
It must cross and hold above 42,222 for an up move towards 42,500 and 42,750, while support is placed at 42,000 and then 41,750, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
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