The Nifty which opened with a positive bias failed to hold on to the momentum as bears took control of D-Street as it reclaimed 10,200 levels. The index slipped below its crucial 200-DEMA placed around 10,114 and now a closed below 10,000 could take Nifty towards 9700.
Bears ruled the D-Street for the third consecutive day in a row and pushed the Nifty below its crucial long-term moving an average of 200-DEMA for the first time on Monday for the first time since November 2016. The Nifty has also registered its fresh low for the year 2018 as it made a strong bear candle.
The Nifty which opened with a positive bias failed to hold on to the momentum as bears took control of D-Street as it reclaimed 10,200 levels. The index slipped below its crucial 200-DEMA placed around 10,114 and now a closed below 10,000 could take Nifty towards 9700.
Traders should not hurry in creating long at the current juncture as long as Nifty trades below its 200-DEMA. A close above 10,200 could signal some short-term strength in the index.
The Nifty which opened at 10,215 rose to an intraday high of 10,224 before bears took control of D-Street. The index hit an intraday low of 10,075 before closing the day at 10,094, down 100.90 points or 0.99 percent.
“Bears continued their domination on the bourses for the third session in a row as they bruised and battered the bulls with a robust bear candle and a wide margin of 1 to 5 advance-decline ratio which was never witnessed in recent times,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol News.
“It is critical for the bulls to witness stability in banking index which may curtail more downsides for Nifty50. On the other hand, if Bank Nifty also succumbs to the selling pressure then selling in Nifty50 stocks may get accelerated further,” he said.
Mohammad further added that 10040 – 9980 appears to be a critical support point for Nifty50 from where a bounce can be expected. For any reason, if indices close below the psychologically important mark of 10,000 then traders should look for bigger targets of 9700 on the downside.Meanwhile, a close above 10200 levels may suggest some short-term strength to the indices.
India VIX moved up by 3.9 percent at 15.81. A rise in volatility for the second consecutive sessions has given an upper hand to bears and suggesting more weakness as Put Call Ratio also falling down from higher levels.
On the options front, maximum Put open interest is placed at 10000 followed by 10100 strikes while maximum Call open interest is placed at 10500 followed by 10400 strikes.
Significant Call writing at 10,200 and 10,100 strikes while even after the market declines Put writing was also seen at 10000 and 10100 strikes.
“Options band signifies a lower trading range between 10000 to 10250 zones. The index formed a Bearish candle on the daily chart and has been making lower highs - lower lows from last three trading session,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“It has broken its crucial rising support trend line which was formed by connecting major swing lows of 9341, 9448,9687 and 10141. It slipped below its 200 DEMA which implies short-term pressure in the market,” he said.
Taparia further added that till it remains below 10180 zones, weakness could continue towards psychological 10000 then 9900-9850 zones while on the upside hurdles are seen at 10276 then 10333 levels.