The selling pressure continued for the third consecutive session, though there was volatility on May 18, the weekly F&O expiry day, weighed down by FMCG, auto, pharma, oil & gas, select technology and metal stocks.
The Nifty50 opened higher at 18,287 and hit an intraday high of 18,297, but lost all those gains in the last one-and-half-hour of trade and hit a day's low of 18,105 before showing a bit of recovery towards the end. The index fell 52 points to 18,130, the lowest closing level since May 5, underperforming global peers and forming a long bullish candlestick pattern on the daily charts.
The index has also consistently been making lower tops lower bottoms for the third straight session, indicating nervousness among participants. It has crucial support at 18,000-18,050 levels, if it manages to hold the same then an uptrend can be possible towards 18,300-18,400 levels, experts said.
"The Nifty has formed a lower top formation on intraday charts and has also formed a bearish candle on daily charts which is broadly negative," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
He feels the market texture is weak and the 20-day SMA (simple moving average) or 18,050 would be the immediate support zone for the bulls. On the other hand, 18,200 could act as an immediate resistance zone for the traders, above which the index could retest the level of 18,280-18,300, he said.
On the monthly charts, 18,200 and 18,300 strikes with maximum Call open interest is expected to remain crucial resistance area for the Nifty50. The meaningful Call writing was also seen at similar strikes.
On the Put side, we have the maximum open interest at the 18,200 strike, followed by the 18,000 strike, with meaningful writing at the 18,200 strike, then the 17,500 strike, which indicates that the 18,000 is likely to be crucial support for the index.
"The Nifty index has now tilted towards the short side with the number of Calls being written for the monthly expiry of May has become significantly higher than that of the Put side," Rahul Ghose, Founder & CEO at Hedged said.
For the Nifty, he feels as long as the highest Put writers are at the 18,000 level, this will act as strong support and one should become bearish only below the 17,800 level.
Bank Nifty was seen outperforming Nifty throughout the day and remained quite strong for a major part of the trading session. The index became vulnerable once SBI announced its quarterly numbers which augmented the pressure. Still, the index closed positive with 54 points gains at 43,752 and formed a bearish candlestick pattern on the daily charts but with making higher high and higher low formations.
"Bank Nifty continues to trade above its 10 DEMA (43,573) implying fresh downside is expected to be seen once it closes below 43,500 levels. Till then it is expected to trade in the 43,500-44,100 range," Gaurav Bissa, VP at InCred Equities said.
The broader markets, too, remained under pressure with the Nifty Midcap 100 and Smallcap 100 indices falling 0.6 percent and 0.5 percent, respectively on weak breadth.
The volatility dropped for yet another session. India VIX, which measures the expected volatility for the next 30 days in Nifty50, fell by 2.36 percent to 12.80 from 13.11 levels.
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