The Nifty on January 16 wiped out some of the previous session’s gains to close lower despite positive global cues, dented by selling in banking & financial services, auto, and metal stocks. Buying in information technology (IT) and FMCG stocks, however, limited losses.
The Nifty opened above the psychologically vital 18,000 mark to climb to 18,050 but lost momentum in late-morning deals. It slipped to 17,854 in the afternoon and closed at 17,895, down 62 points.
The index formed a bearish candle on the daily timeframe near the 100-day exponential moving average (DEMA; 17,884) and remained below 9-DEMA (17,961) as well as 50 DEMA (18,099), which is broadly negative for the market. It, however, made higher highs and higher lows for the second straight session.
For the coming sessions, 17,800, which the index has been holding nicely, is expected to remain the sacrosanct support, whereas 18,100, or 50 DEMA, is going to be a critical hurdle. A breaking of it can push the index beyond the 18,200-18,300 area, experts said.
“The market is consolidating within the 17,850 to 18,050 price range. On daily charts, the Nifty has formed a bearish candle near the 100-day SMA (17,915) which is broadly negative,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
He said 17,800 would act as sacrosanct support and a break of it can lead to selling pressure that can drag the index to 17,700-17,650.
The market expert said 18,000 would be the trend reversal level and above it, the index move to 18,100-18,135.
The Options data also indicates the Nifty may remain in the 17,800-18,100 range in the coming sessions. The maximum Call open interest was at 18,000 strike, which is expected to be crucial resistance for the index, followed by 18,100 strike, with meaningful Call writing at similar strikes of 18,000 and 18,100.
On the Put side, the maximum open interest was at 17,900 strike followed by 17,800 strike, with writing at 17,700 strike and then 17,600 strike.
India VIX, a gauge of volatility expected over the next 30 days, was up 3.89 percent from 14.46 to 15.02 levels, giving discomfort to the bulls.
Banking index
The Bank Nifty opened positive at 42,622 but lost gains in late morning deals to plunge to 42,066. It remained under pressure for the entire session and closed 204 points lower at 42,168.
It formed a bearish candle on the daily scale but made higher highs, higher lows from the third session. It has to hold above 42,000 to make towards 42,500 and 42,750, while supports are at 42,000 and then 41,750, said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
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