The Nifty50 formed a bearish candle for the sixth consecutive day in a row and analysts feel that it will be hard for the index to breach the 200-DEMA in a hurry.
The Nifty50 which started on a muted note failed to recoup losses and extended its decline which took the index below 10200 levels making a strong bearish candle on the daily charts on Wednesday.
The index closed near its intraday low which is not a good sign for the bulls but experts feel that the index could form short-term button soon as it emerges near its 200-days exponential moving average (DEMA) placed around 10,128.
The Nifty50 formed a bearish candle for the sixth consecutive day in a row and analysts feel that it will be hard for the index to breach the 200-DEMA in a hurry.
The index which opened at 10,232 rose marginally to hit the intraday high of 10,243. But, bears took control of the index and pulled the index lower towards 10,150 to hit its intraday low of 10,141. It closed 95 points lower at 10,154.
“The Nifty50 extended its downswing as it registered one more bearish candle for 6th session in a row. In this process, it also almost tested its 200 Day Simple Moving Average. As directional move emerged in Tuesday’s trading session with the breakdown of trading range below 10300 levels this correction should ideally get extended towards 10,000 kind of levels to meet pattern targets,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“However, in between around 10100 levels confluence of supports are emerging accompanied with oversold levels for the market. Hence, somewhere between 10100 – 10000 levels market should post short-term bottom in next couple of trading sessions,” he said.
Mohammad further said that the real strength in the index on upsides will emerge only on a close above 10450 levels but there is good technical reasons for markets to post a short-term bottom in the zone of 10100 – 9983 levels.
India VIX fell down by 3.26 percent at 15.71 and decline in volatility even after new lows in the index suggests that 200 DEMA and psychological 10000 zones could arrest the immediate fall on market.
On the options front, maximum Put open interest is seen at strike prices 10,000 followed by 10,200 while maximum Call open interest stood at strike price 10,600 followed by 10,500.
Significant Call writing was seen at 10200 strikes followed by 10600 strikes which is restricting its upside move while minor Put writing is seen at 10200 followed by 10100 levels which may give a pause in negative momentum for a consolidation move.
“Option band signifies a shift in the lower trading range between 10000 to 10350 zones for next coming sessions. On the technical front, Nifty the swing low support of 10276 after the consolidation of last 18 sessions and started the fresh declines. It continued its weakness and has been forming lower lows for sixth consecutive sessions,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol told Moneycontrol.
“It formed a Bearish candle which closely resembles a Bearish Belt Candle kind of pattern on the daily scale which indicates that Bears are holding the grip in the market. Now, a hold below 10276 could continue its weakness towards 10100 then 10077-10033 zones while on the upside hurdles are seen at 10276 then 10333 zones,” he said.
Taparia further added that the index has seen a correction of around 1000 points from the top of 11171 and now immediate support exists near to 10100 zones which is 200-EMA on the daily scale.
