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The Nifty plunged over 2 percent to record its biggest single day fall in 19 months on January 17 as HDFC Bank-led fall in banking stocks and weak global cues created panic in the Street.
The index started the day sharply lower and the selling pressure intensified with Nifty sinking to the day’s low of 21,550. It ended near the day’s low at 21,572, down 460 points, its biggest fall since June 16, 2022.
It formed a bearish candlestick with long upper shadow on the daily charts, indicating selling pressure at higher levels.
The index broke slipped below the 10-day exponential moving average of 21,750, where the support was placed, as well as below the upward sloping support trendline.
Overall, the index may remain rangebound by taking support at 21,550-21,450, A slip below the support can extend the correction to 21,350-21,300 mark, which looks unlikely given the rangebound action, experts said.
“Till it holds below 21,700 zone, weakness could be seen towards 21,450 and 21,300 zones while on the upside hurdle shifted lower at 21,700 and 21,850 levels,” Chandan Taparia, senior vice president | analyst-derivatives at Motilal Oswal Financial Services said.
According to Rupak De, senior technical analyst at LKP Securities, the sentiment could deteriorate if Nifty drops below 21,550, where the 21-EMA is situated.
On the downside, a breach of 21,550 may result in the index falling to 21,350.
The maximum Call open interest was visible at 21,800 strike, followed by 22,000 and 22,100 strikes, with Call writing at 21,800 strike, then 21,700 strike. On the Put side, the 21,000 strike owned the maximum open interest, followed by 21,500 strike and 21,300 strike, with writing at 21,000 strike, then 21,100 strike.
The data indicates that 21,500 is expected to be the immediate support for the index, while the 21,700-21,800 is the likely hurdle on the higher side.
Bank Nifty
Bank Nifty was the reason behind the carnage. The banking index opened gap down and formed a bearish candlestick pattern with long upper shadow on the daily timeframe.
Bank Nifty fell 2,061 points, or 4.28 percent, the biggest single day correction since February 2022, to end at 46,064. HDFC Bank led the fall as it tanked 8.2 percent.
“The index sharply fell below the 38.20 percent Fibonacci Retracement level of the previous leg of rally (from 43,230 to 48,347),” Rupak De, senior technical analyst at LKP Securities said.
The sentiment may remain weak, with immediate support at 45,900-45,930. “A drop below 45,900 could potentially initiate a further correction towards 45,500. On the upside, resistance is identified at 46,350,” he said.
The volatility index India VIX jumped 11.11 percent to 15.08.
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.
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Technical View | Nifty forms bearish candle, Bank Nifty remains a worry – Moneycontrol
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