The market snapped three-day gaining momentum with Nifty closing below 18,700 after a hawkish comment from the US Federal Reserve indicating the possibility of two more rate hikes this year.
After a flat start for the day, the market remains sideways during the first half, however, selling in the second half dragged the Nifty below the 18,700 mark.
Among sectors, the Nifty PSU Bank index shed 2 percent, the Nifty bank index down 1.2 percent and the Information Technology index shed 0.5 percent, while the pharma index rose 1 percent and the FMCG index added 0.5 percent.
On the daily charts the Nifty has formed an Engulfing Bear candle stick pattern which has bearish implications. The daily momentum indicator has a negative crossover which is a sell signal. Thus, both price and momentum indicators is suggesting weakness in the near term, experts say.
"The range of consolidation is likely to be 18,800–18,500. The 20-day moving average which has been holding out during this rally is placed at 18,532 and so only a decisive break below that shall reverse the trend. In terms of levels, 18,780–18,800 shall act as an immediate hurdle zone, while 18,530 – 18,500 is the crucial support zone to watch out for," said Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas.
On the Options front, the weekly maximum Call OI (open interest) is at 18,800 then 18,700 strike, while the maximum Put OI is at 18,700 then 18,600 strike. Call writing is seen at 18,700 then 18,800 strike, while Put writing is seen at 18,700 then 18,500 strike.
The Option data suggests a broader trading range in between 18,450 to 18,900 zones, while an immediate trading range in between 18,600 to 18,800 zones.
Bank Nifty
Bank Nifty index opened on a flattish note and failed to hold above 44,044 marks and gradually drifted by more than 500 points towards 43,400 zones. It finally broke its crucial 20DEMA on a daily scale and gave a range breakdown after fourteen sessions.
"It formed a Big Bearish candle on the daily scale as sustained selling pressure was seen throughout the day as private Banks remained under pressure," said Chandan Taparia, Senior Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
"Now till it holds below 43,750 zones weakness could be seen towards 43,250 then 43,000 levels while on the upside hurdle is placed at 43,750 then 44,000 levels," he added.
Disclaimer: The views and investment tips expressed by investment 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.