Technical View | Nifty may breach 17,800 if banks weaken further

The Nifty50 started off the week on a negative note, extending losses for the second consecutive session on February 20, despite a positive trend in Asian peers. The index closed at a one-week low and formed a bearish candle on the daily charts after breaking the downward-sloping resistance trendline, adjoining December and January highs.

The index opened higher at 17,966 and climbed up to 18,004, but lost all its gains in late morning deals and corrected up to 17,818 in the afternoon. Finally, the index settled at 17,845, the lowest closing level since February 13, down 100 points.

Given the negative sentiment and having slipped below the psychological 18,000 mark, the index may break its next support at 17,800, but if it holds the same in coming sessions, then it may try to get back to recent highs, experts said.

The weakness in the benchmark Nifty50 is attributed to selling in banking & financial services, metals, pharma, oil & gas, and select FMCG stocks.

“The bears remain at the helm as Nifty slips back into the falling channel. “The trend is likely to remain weak as long as the index remains below 18,000; any rise is likely to get sold into,” Rupak De, Senior Technical Analyst at LKP Securities, said.

According to De, the immediate support for Nifty is seen at 17,750. Below this level, the index may move down to 17,600.

Again, a fall below 17,600 may take the Nifty towards 17,400, he said, adding that on the higher end, a decisive breakout above 18,050 may induce a rally towards higher levels.

On the monthly option front, we have seen maximum call open interest at 18,000 strike, followed by 18,500 strike, with Call writing at 17,900 strike, then 18000 strike, whereas maximum Put open interest was seen at 17,500 strike, followed by 17,600 strike, with Put writing at 17,600 strike, then 17,650 strike.

According to option data, the Nifty may trade in a wider range of 17,650 to 18,200 levels in the coming sessions.

Volatility has increased slightly but has been deflated in recent sessions.The volatility index, India VIX, rose by 2.27 percent from 13.09 to 13.38 levels.

Bank Nifty opened at 41,222 and rose to 41,293 before succumbing to pressure throughout the day, mirroring market performance.It hit an intraday low of 40,580 before closing down 430 points at 40.702.

The index has given the lowest daily close of the last 12 trading sessions and has been underperforming Nifty for the last nine sessions. The index formed a bearish candle on the daily scale for a third straight session. It has witnessed lower highs – lower lows in the last two sessions.

“Now, till it holds below 41,000 level, the weakness is expected towards 40,500 then 40,250 zones while on the upside, the hurdle is expected at 41,000 then 41,250 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Leave a Reply

Your email address will not be published. Required fields are marked *