Nifty continues to form bearish candle, next target seen at 10,630

The index formed large bearish candle on the daily scale and could fall below 10,600 levels if it breaks crucial support of 10,630 levels in coming session, experts said.

The Nifty50 extended downtrend on first day of the week and closed below psychological 10,700 levels Monday as investors may be cautious ahead of Interim Budget to be announced on February 1 and expiry of January futures & options contracts on January 31. The index fell 1.2 percent last week.

The sell-off in banking & financials, FMCG and Pharma stocks pulled the market sharply lower while the broader markets continued to underperform frontliners. The Nifty Midcap index was down 2.1 percent and Smallcap index declined 1.8 percent.

The index formed large bearish candle on the daily scale and could fall below 10,600 levels if it breaks crucial support of 10,630 levels in coming session, experts said.

The Nifty50 opened marginally higher to hit an intraday high of 10,804.45, but immediately wiped out those early gains and gradually extended losses to touch a day's low of 10,630.95.

The index has broken its rising support trendline by connecting all the recent swing lows of 10,004, 10,333 and 10,700 zones. It has also broken the formation of higher swing lows as slipped below recent swing low of 10,692 levels. It lost 119 points or 1.10 percent to close 10,661.50.

"Nifty index formed a bearish candle on daily scale and forming lower lows from past five trading sessions. Now till it holds below 10,750-10,777 zones, it can slip towards next swing low support at 10,630 then 10,535 levels while on the upside major hurdle is seen at 10,777 then 10,850 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

India VIX moved up by 6.83 percent at 18.90 levels. Sudden spike in VIX with lower Put Call Ratio indicates limited upside in the market as index has broken immediate support zones, experts said.

On the option front, maximum Put open interest (OI) is at 10,500 followed by 10,700 strike while maximum Call OI is at 11,000 followed by 10,900 strike.

Meaningful Call writing is at 10,700 followed by 10,800 strike which will restrict its upside move while Put Writing is at 10,600 followed by 10,500 strike. Option band signifies a shift in lower trading range in between 10,550 to 10,777 zones.

Bank Nifty opened negative and continued its lower lows for the fifth consecutive session. It slipped below 50 DEMA and broken its consolidation band of 27,150-27,200 zones with its extended weakness towards 26,600 levels.

The index fell sharply by 462.25 points to close at 26,653.05 and made a biggest bearish candle in the last many sessions.

"The formation of bearish candle indicates that bears have taken tight grip with the limited upside move. Now till its holds below 27,000 zones it can continue its selling pressure towards 26,400 then 26,250 zones while on the upside medium term hurdle is seen at 27,150 zones," Chandan Taparia said.

Source : www.moneycontrol.com 

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