The Nifty50 after rangebound trade fell sharply in last hour of trade on Wednesday and formed big bearish candle on the daily charts, weighed by index heavyweights HDFC Bank, Infosys, HDFC and Reliance Industries.
ITC was the biggest loser, down over 4 percent after margin disappointment in Q3.
The immediate crucial support for the index could be 10,790, experts said, adding if it breaks that level then there could be sharp fall in coming sessions.
Overall index has got stuck in a broader trading range of 10,700 to 10,985 zones and requires a decisive range breakout for next leg of rally, experts said.
The Nifty50 after opening flat remained rangebound, but started falling in last hour of trade and hit an intraday low of 10,811.95. The index closed 91.30 points lower at 10,831.50 after breaking its consolidation range of last five trading sessions.
"Recent breakout appears to have whipsawed as Nifty50 signed off the session with a strong bearish candle from around critical resistance point of 10,950 levels. However, still larger picture remains that of sideways as Nifty50 is unable to attract any follow through action in recent past," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said interestingly last 13 days of price action carved out a small ascending channel whose support is placed around 10,790 levels.
In case if Nifty slide continues below 10,790 levels then based on this channel breakdown another 200 points fall can be expected with a initial target of 10,571 levels, according to him.
Mazhar said in between Nifty may find some meaning full support around 10,690 levels where as upsides shall remain capped around 10,950. Hence, aggressive traders can go short on Nifty if it trades below 10,790 for one hour and look for a target of 10,600, he advised.
India VIX moved up by 0.58 percent to 18.08 levels. Volatility has to cool down below 16 zones to get a decisive range breakout.
On the option front, maximum Put open interest (OI) is at 10,500 followed by 10,800 strike while maximum Call OI is at 11,000 followed by 10,900 strike.
Meaningful Call writing is at 11,000 followed by 10,900 strike while Put unwinding is at most of the immediate strikes. Option band signifies a trading range in between 10,700 to 11,000 zones.
"Nifty index started to form lower highs - lower lows on daily scale from last two sessions as it failed to surpass multiple hurdle of last nine weeks at 10,985 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.
He said now if it sustains below 10,880 zone then it may drift towards it 50 DEMA and next major support at 10,777 then 10,700 zones while on the upside hurdles are seen at 10,929 then 10,985 levels.
Bank Nifty finally broken its consolidation band of last five trading sessions from 27,350 to 27,600 zones and slipped towards 27,190 levels. It closed 231.50 points lower at 27,250.75 and formed a bearish candle on daily scale as supply pressure is visible at higher levels.
"It has taken multiple hurdle at 27,600 zones and resistances are shifting lower. Now it has to cross and hold above 27,350 zones to witness an upmove towards 27,600 then 27,750 zones while immediate support exists at 27,150 then 27,000 zones," Taparia said.
Source:https://www.moneycontrol.com/news/business/markets/technical-view-nifty-forms-bearish-candle-after-consolidation-10790-crucial-for-bulls-3426401.html
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