As long as Nifty50 trades below 10,500 levels, bears will remain in control and the selling pressure could take the index towards 10,350 levels on the downside, suggest experts. The next crucial support is placed at 200-DMA around 10,240.
The Nifty50 not only broke below its crucial support placed at 10,500 level on Wednesday but also its 50-days moving average at 10,460 which resulted in a strong bearish candle on the daily charts.
As long as Nifty50 trades below 10,500 levels, bears will remain in control and the selling pressure could take the index towards 10,350 levels on the downside, suggest experts. The next crucial support is placed at 200-DMA around 10,240.
The Nifty50 remained under pressure from the word go. It opened at 10,521 and rose marginally to hit an intraday high of 10,533. It hit an intraday low of 10,417 before closing the day 106 points lower at 10,430.
“The Nifty50 appears to have resumed its downtrend as Tuesday’s mild positive close proved to be a tepid bounce as it paved the way for a much ferocious bearish candle formation in Wednesday’s session,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“As support levels are crumbling down one after the other it looks prudent for traders to wait for stability and some signs of strength before initiating fresh long side positions. This downswing appears to have a logical target of 10,146 levels which should sustain to pave the way for a multi-week corrective structure,” he said.
Mohammad further added that only a decisive breach of this level shall have the ability to challenge the lows of 9,950. “Minor supports are placed around 10,396 and at 200-Day Moving Average whose value is placed around 10,240 levels whereas on the upsides a close above 10,533 can be considered as an initial sign of strength,” he said.
India VIX moved up by 4.10 percent at 14.16 levels. On the options front, maximum Put OI is intact at 10,500 followed by 10,400 strikes while maximum Call OI is placed at 10,800 followed by 11,000 strikes.
Significant Call writing was seen at 10,500 followed by 10,600 strikes which is shifting its resistance to lower zone while Put unwinding at 10,500 and fresh Put writing is seen at 10,400 strikes.
“Options data suggests a shift in the lower trading range between 10,350 to 10,550 zones. The Nifty index failed to cross previous day’s high and corrected towards 10420 zones. It formed a Bearish Candle on the daily scale and witnessed a sharp selling in later part of the session,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Nifty has been making lower highs – lower lows for last six trading sessions and not ready to surpass any immediate resistance zone,” he said.
Taparia further added that if Nifty sustains below 10,500 zones then weakness could continue towards 10,350-10,333 zones. “Now index needs to negate the formation of lower highs – lower lows to get any short-term stability else weakness could persist in the market,” he added.
