Technical View: Nifty 50 had a disappointing start to the week today. It lost all its previous week’s gains. The index closed today January 6 with a decline of 1.6%. This was its biggest one-day fall in the last three months. Meanwhile, India VIX rose sharply. This increased concern among the bulls. The index fell below the important 200-day EMA (23,700) with above average volumes. Now trading below all major moving averages. If it fails to take support at 23,450-23,500 zone in the upcoming sessions, selling pressure may extend to November low of 23,263. However, experts say that in case of a rebound, there is an immediate resistance zone at 23,700.
After a flat start to the market, Nifty tried to hold on to 24,000 points. But lost its strength after the first hour of trading. After this it remained negative the whole day. The index closed at 23,616, down 389 points (1.62%). This is the biggest single day loss since October 3. The index formed a long bearish candlestick pattern with a lower high-lower low formation on the daily chart. Additionally, there was a negative crossover in the momentum indicator RSI, indicating further weakness.
How will Nifty move tomorrow on 7th January?
Shrikant Chauhan of Kotak Securities Believes that the current market sentiment is weak, but also oversold. He advises that level based trading would be the ideal strategy for intraday traders.
For intraday traders, as long as the market remains below 23,750, weak sentiments are likely to persist. If the index falls below this level, it could slip again to 23,500 points, he said. There may be further decline. Due to this the index may fall down to 23,400.
Weekly options data indicates that Nifty may remain within a broad trading range of 23,000-24,500. In which there is immediate support at 23,500 and resistance at 24,000.
How will Bank Nifty move tomorrow on January 7?
Bank Nifty saw a more significant correction than the benchmark Nifty 50. It has fallen below 50,000 points with a decline of 1,067 points (2.09%). This is its biggest single day fall since November 13. The index closed at 49,922. This level is its lowest closing level after August 14.
The index has declined from November lows and decisively fell below the 200-day EMA (50,492). This has formed a large bearish candlestick pattern on the daily chart with above average volume. It showed a negative crossover in the momentum indicator RSI and MACD, indicating weakness.
Chandan Tapadia of Motilal Oswal Financial Services Said, “As long as Bank Nifty remains below the zone of 50,250, it may remain weak. It may get possible support at the level of 49,500 and 49,250. On the upside, resistance is seen at 50,250. After this, resistance is visible at 50,500.
Meanwhile, India VIX, volatility index, rose 15.58% to 15.65, the biggest one-day jump since August 5. This level is its highest level since November 22. This made the bulls uncomfortable.
(Disclaimer: The views and investment advice expressed on Moneycontrol.com are the personal views and opinions of investment experts. Moneycontrol advises users to consult certified experts before taking any investment decision.)