Worries about the global banking sector roiled Indian markets, with the Nifty falling to more than a five-month low but some buying in the last couple of hours helped the pare losses to close 112 points down on March 20.
The index opened lower at 17,067, which was also the day’s high, and sank to 16,828 in the afternoon but gained some of the lost ground helped by buying in banking & financial stocks to end at 16,988.
The index formed a hammer pattern, which is generally a bullish reversal pattern. The next resistance area for the index is expected to be 17,200-17,300, with crucial support at 16,800-16,750 levels, experts said.
"The Nifty formed a hammer-like pattern on the daily chart, suggesting a reversal in the prevailing trend. On the daily chart, it fell below 16,950 only to close a bit higher. The momentum indicator remained in a bearish crossover with a reading below 40," Rupak De, Senior Technical Analyst at LKP Securities said.
On the hourly chart, the index moved higher following consolidation. The Relative Strength Index, a momentum indicator, on the smaller timeframe entered a bullish crossover.
Hence, on the higher end, the index may move up towards 17,250, while on the lower end, the closing basis support remains intact at 16,950, he said.
On the weekly Options front, the maximum Call open interest was at 17,200 followed by 17,300 and 17,000 strikes, with Call writing at 17,200 strike then 16,900 strike.
On the Put side, there was maximum open interest at 16,900 strike followed by 17,000 and 16,800 strikes, with writing at 16,900 strike, then 16,700 and 16,800 strikes.
The data indicates that the Nifty50 may trade in the 16,800-17,200 range in the near term.
Banking index
The Bank Nifty also remained under pressure, with the opening tick emerging as the day’s high. The index drifted to 38,942 but narrowed losses in the last hour of trade and closed 236 points down at 39,362.
The index, too, formed Hammer pattern on the daily timeframe, pointing to the possibility of a reversal in the coming sessions.
"It has to cross and hold above 39,400 levels, to extend the bounce towards 39,750 then 40,000 levels, while on the downside, support is placed at 39,000 then 38,888 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
India VIX, which is a gauge of volatility expected over the next 30 day, went up 8.4 percent to 16.01 levels. If the volatility remains on the higher side, the recovery if any, may not be sustainable, experts said.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.