Volatility remained high as market participants approached the monthly expiry of June Futures & Options contracts due on Thursday and exit polls on Saturday.
As long as the index trades below 23,000, consolidation is expected, with support likely at the 22,575-22,600 zone.
The market breadth remained in favour of the bears, with about 1,299 equity shares declining against 955 shares advancing on the NSE.
Monthly options data suggested that the Nifty may find resistance at the 22,800-22,900 levels, with support at the 22,700-22,500 zone.
"Crucial support for the Bank Nifty is placed at 48,300 – 48,250, which coincides with the 20-day moving average.
Market Under Pressure
The Nifty had a gap-down opening and remained under pressure throughout the session due to consistent profit booking, forming a bearish candlestick pattern on the daily charts on May 29. Bears maintained their lead over bulls for four days in a row and tightened their grip on Wednesday. Volatility remained high as market participants approached the monthly expiry of June Futures & Options contracts due on Thursday and exit polls on Saturday.
As long as the index trades below 23,000, consolidation is expected, with support likely at the 22,575-22,600 zone. This range coincides with the low of the big green candle of May 23, as well as the 20-day EMA (Exponential Moving Average), followed by key support at 22,500 (20-day SMA or mid of Bollinger band). Breaking this key support could bring major selling pressure to the market. Experts said the hurdle on the higher side is expected to remain at 23,000.
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The Nifty 50 opened lower at 22,763 and corrected to 22,685 during the day before closing the session at 22,705, down 183.5 points. The market breadth remained in favour of the bears, with about 1,299 equity shares declining against 955 shares advancing on the NSE.
"There hasn't been a significant price change for the benchmark index, but the fourth consecutive session of sell-off with the advance-decline ratio favouring the bears certainly indicates a weakening of the bullish stance," said Osho Krishan, senior analyst - technical & derivative research at Angel One.
From a technical standpoint, Krishan feels the Nifty has breached the neckline of the recent breakout and is now heading towards the mean of the 'Rising channel' at 22,600, followed by the 20-day EMA at 22,500, which is considered the crucial support level.
On the higher end, the bearish gap of 22,825-22,860 is seen as an intermediate hurdle, while the sturdy wall stays at the 23,000 mark, he said.
Monthly options data suggested that the Nifty may find resistance at the 22,800-22,900 levels, with support at the 22,700-22,500 zone.
On the Call side, the maximum open interest was seen at the 23,500 strike, followed by the 23,000 and 24,000 strikes, with maximum writing at the 22,800 strike, then the 22,900 and 23,000 strikes. On the Put side, the 22,000 strike had the maximum open interest, followed by the 22,500 and 22,700 strikes, with maximum writing at the 22,300 strike, then the 22,000 strike.
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Bank Nifty
The Bank Nifty also maintained a downward bias for the second straight session after a gap-down opening and closed at 48,501, down 641 points or 1.3 percent, contributing most to the Nifty 50 fall today.
The index has formed a bearish candlestick pattern on the daily timeframe with an upper shadow but took support at the 20-day EMA (48,389) and is very close to the 20-day SMA (48,317), the mid of the Bollinger band. Breaking this may strengthen the bears.
"Crucial support for the Bank Nifty is placed at 48,300 – 48,250, which coincides with the 20-day moving average. Overall, both indices have reached crucial Fibonacci retracement levels, and we expect a recovery to resume over the next few trading sessions," said Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas.
Meanwhile, the India VIX, the fear gauge, remained above 24 levels, down a bit by 0.08 percent to end at 24.18 levels.
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