The Nifty50 extended losses for the second consecutive session due to selling pressure in the afternoon and closed below the 18,600 mark despite a positive trend in Asian peers, on June 9. All sectors traded lower with FMCG, IT and PSU Bank falling the most.
The index opened higher and climbed up to 18,677, but lost all gains in the later part of the session taking support at 18,550 levels. Finally, it settled with 71 points losses at 18,563 and formed a bearish candlestick pattern on the daily scale making lower highs and lower low formation.
But overall the Nifty50, since March lows, has maintained higher highs and higher lows formation. Hence, 18,500-18,400 is likely to act as a crucial support area for the index, with resistance at 18,700-18,800 levels, and overall, the index is likely to trade within this range, and breaking of the same on either side could give further direction, experts said.
On the weekly scale, the Nifty50 has formed small bodied bearish candlestick pattern with an upper shadow, indicating selling pressure at higher levels, but still maintained higher highs formation for the 11th consecutive week. The index was up 0.16 percent during the week.
"As long as the index is trading below 18,675, the weak sentiment is likely to continue and below the same, it could slip to 20-day SMA (simple moving average) or 18,450. Further downside may also continue which could drag the index till 18,350," Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities said.
On the flip side, he feels a fresh uptrend rally is possible only after the dismissal of 18,675 and above the same the market could rally till 18,800-18,900.
On the Option front, we have seen maximum Call open interest at 18,700 strike, followed by 18,600 strike and 18,800 strike, with Call writing at 18,600 strike, then 18,700 strike. On the Put side, the maximum open interest was at 18,700 strike, followed by 18,600 strike and 18,000 strike, with writing at 18,600 strike, then 18,300 strike.
The above Option data indicated that the Nifty50 may trade within the range of 18,300-18,800 in the coming weeks.
Bank Nifty
Bank Nifty climbed over the 44,000 mark and struggled a lot to hold the same, but failed to sustain and closed with 6 points losses at 43,989. The index has formed small bodied bearish candlestick pattern with a long upper shadow on the daily charts, while on the weekly timeframe also, there was the same kind of candlestick pattern formation after trading within the previous week's range. It gained 51 points for the week.
"The Bank Nifty index is currently experiencing selling pressure as the bears maintain their control at higher levels. The resistance zone between 44,300 and 44,500 has proven to be strong, preventing the index from making significant upward moves," Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said.
On the downside, he feels there is a support level at 43700, which has the potential to act as a buying opportunity. If the index manages to hold above this support level, it could attract buyers who see it as a favourable entry point.
It is important to monitor the price action around these key levels, as a break above the resistance zone or a breach below the support level could indicate a potential change in the market sentiment and trigger further directional moves, he said.
India VIX, which measures the expected volatility for the next 30 days in the Nifty50, fell by 1.22 percent to 11.12 levels, from 11.26 levels.
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