10
By Chandan TapariaOnce gain the bears used Nifty’s gap-up opening as a shorting opportunity and started dragging the index lower from first trade.
The fall accelerated as the day progressed and the index continued to make lower lows throughout the session.
Nifty broke its recent low and closed below the 8,500 mark to form a big bearish candle on the daily chart.
It saw a breakdown from the Rising Trendline and the 100 EMA on the monthly chart, which opened the door for the 7,900 and 7,500 levels.
The RSI also broke its strong support at 35 on the monthly scale.
If it sustains below that level, we may see further selloff in the market.
At the current juncture, there is no sign of trend reversal and, thus, we may see continuation of Nifty’s fall towards 7,900 and then 7,500 levels.
On the flipside, as long as Nifty doesn't close above the 9,200 level, the bears will have an upper hand and every bounce shall be used as shorting opportunity.
Considering the overall scenario, traders should not look for bottom fishing as the market is in strong bear grip.
We are not seeing any sign of stability in market.
On the options front, maximum Call open interest stood at 12,000 and then 10,000 levels while maximum Put open interest stood at 8,500 then 9,000 levels.
Option OI data lay scattered at various strike prices as many Put writers got trapped in the recent market meltdown.
Even unwinding pressure kept the Street under pressure.
The market witnessed Call writing at strike prices 10,000 and 9,500 and Put unwinding at all immediate strike prices.
Minor Put writing was also seen at strike price 8,000.
Options data indicated a shift in wider trading range between 8,000 and 9,000 levels.
India VIX closed 1.64 per cent higher at 63.95.
A VIX level beyond 50 mark suggests volatile swings could continue in the market.
Volatility has to cool down from current multiple-year high levels for stability to return and the market to see a smooth ride.
Bank Nifty continued its bearish momentum for yet another day and fell by around 2,300 points from its opening high.
The banking index underperformed Nifty for second consecutive session, and formed a negative candle on the daily chart.
The index also formed a Three Black Crows pattern on the daily scale, indicating complete dominance of the bears.
Currently, Bank Nifty is hovering around the ‘make or break’ levels in the 20,500 – 20,600 zone on the monthly chart, which is the confluence zone of the previous swing high and the 61.80% retracement level of its previous rally from 13,407 to 32,613 levels.
The RSI oscillator has seen a breakdown on the monthly scale (confirmation will come on a monthly closing basis).
If Bank Nifty closes below 20,500 level, then we may see an extension of the ongoing fall towards the 18,000 – 17,500 zone.
On the upside, resistance is continuously shifting lower and now the immediate hurdles are at 22,500 and 23,500 levels for the banking index.
Nifty futures closed negative at 8,442 with 5.31 per cent losses.
Some long build-up was seen in stocks like Just Dial, Oil India, PFC, BEL and PFC; while shorts were seen on counters like IndusInd Bank, Manappuram, Bandhan Bank, Shree Cement and Chola Finance.
(Chandan Taparia is Technical - Derivative Analyst at MOFSL.
Investors are advised to consult financial advisers before taking an investment calls based on these observations)
Stock Market
F O: Nifty Bank in the ‘make or break& zone; Nifty next stop 7,900
Download Android App
Share in 
FullScreen CheckVideos
| Unlimited Portal Access + Monthly Magazine - 12 issues-Publication from Jan 2021 |
Buy Our Merchandise (Peace Series)
- Details
- Category: Stock Market
21