Technical View | Nifty sinks to 4-month low, 17,500 is the level to watch

The Nifty extended losses for the fifth straight session and closed at a four-month low amid volatility on February 23, the monthly expiry day for futures & options contracts, after hawkish RBI and US Fed commentaries weighed on the investors.

After opening higher at 17,575, the Nifty slipped to the day’s low of 17,455 but immediately rebounded to touch the intraday high of 17,620—all in the morning itself.

The index failed to sustain recovery and lost momentum. It settled at 17,511, the lowest closing since October 18, 2022, down 43 points.

The index formed another bearish candle on the daily charts, making lower highs, lower lows for the fifth day in a row. It stayed below long upward-sloping support trendline as well as the 200-day exponential moving average (EMA) of 17,591 for the second straight session.

The index seems to be taking support at 17,500, which has the maximum Put open interest build-up. If the index holds the level in the coming sessions, it can move towards 17,700-17,800. A breach, however, can bring the index down to 200 daily moving average of 17,362, experts said.

“Going ahead, the low of 17,455 is likely to act as immediate support for the falling Nifty,” Rupak De, Senior Technical Analyst at LKP Securities said.

A decisive fall below 17,450 can take the index to 17,200–17,150 but if the level holds, the Nifty can climb to 17,750–17,850, where the upper band of the falling channel lies, the expert said.

On the expiry session, the maximum Call open interest was at 17,600, which can be the immediate resistance for the Nifty, followed by 18,000 strike, with Call writing at 17,600 strike, then 17,500 strike.

On the Put side, the maximum open interest was at 17,500 strike, followed by 17,000 strike, with writing at 17,500 strike.

The data indicates that the Nifty may see a broad trading range of 17,000-18,000 in the coming sessions.

The India VIX fell 3.28 percent from 15.59 to 15.08, but was still on the higher side.

Banking index

The Bank Nifty closed the range-bound session on a flat note, rising 6 points to 40,002 and formed Doji pattern with a long lower shadow on the daily charts after a five-day fall, indicating indecisiveness among bulls and bears about the market trend. There was buying support at lower levels, hinting at the possibility of a bounce back.

Bank Nifty has been forming lower highs, lower lows on the daily scale for the last five sessions and the trading range is gradually shifting lower.

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