The Nifty remained under pressure on March 2 and gave up most of the previous day’s gains due to selling pressure in banking & financial services, auto, technology and FMCG names.
The index, which opened lower and extended losses to hit the day’s low of 17,306, closed at 17,322, down 129 points.
It formed a bearish candlestick on the daily charts with above-average volumes, and made lower lows and lower highs, taking support at 17,300.
If the index breaks the recent swing low area of 17,250-17,300, the correction can drag it to 17,000, whereas on the higher side, 17,450 remains crucial for a further uptrend, experts said.
“A long bear candle was formed on the daily chart that has engulfed the upmove of the previous session. Technically, this pattern indicates a lack of strength in the recent upside bounce and the weakness is likely to continue for the short term,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
The underlying trend continues to be weak. The Nifty can retest the recent swing low of 17,250 in the short term.
“Further weakness below this support could open the next lower levels of 17,000. Any upside bounce from here could find strong resistance around 17,470 levels,” the expert said.
The options data indicates the maximum Call open interest was at 17,500 strike followed by 18,000 strike, with Call writing at 17,500 strike, then 17,400 and 17,300 strikes. The maximum open interest on the Put side was at 17,000 strike followed by 17,500 strike, with Put writing at 17,500 strike, then 17,400 and 17,300 strikes.
This means 17,500 is expected to be the resistance in the near term, while 17,000 will likely act as support.
“The monthly options open interest data is suggesting a bounce in the index from 17,400 level as the 17,500 PE still has high open interest and this was followed up today with an addition in open interest at the 17,400 PE strike. It is not very common to see in-the-money put options having an increase in OI in a falling market,” Rahul Ghose, Founder & CEO, Hedged, said.
Banking index
Bank Nifty remained under pressure and hit the day’s low of 40,313. The index closed 308 points lower at 40,390 and formed a bearish candlestick pattern on the daily charts. It, however, held firm above 200-day EMA (40,022), which can be near-term support.
“Traders are moving into Bank Nifty next week by creating the 40,500 short straddle and 40,000 and 41,000 short strangles, which indicates this to be the broad range for the coming week,” Ghose said.
But from the monthly expiry perspective, this range won’t hold, as the index has been in a very small range for a long time, he added.
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