Tech View: Nifty50 forms bearish candle on daily and weekly charts; what should investors do on Monday?

The market saw a knee-jerk fall, largely in line with the weakness seen in the US and Asian markets. The S&P BSE Sensex plunged more than 1,000 points, while Nifty50 closed below its crucial support placed at 17,800.

Analysts advise traders to remain cautious amid rate hike fears from the US Federal Reserve.

“Post the release of US inflation data, which showcased an MoM increase in inflation, the global markets have been pricing in the likelihood of a more aggressive policy response from the US Fed,” Vinod Nair, Head of Research at , said.

The Nifty50 closed 346 points lower at 17,530. On a weekly basis, the index corrected 1.7 per cent. It formed a bearish engulfing candle after two consecutive bullish candles, which suggests that the momentum could take a breather.

The crucial support for the index is at 17,500 and below that, 17,000 is likely to act as strong support. On the upside, 17,700-17,850 will act as stiff resistance levels for the bulls.

After breaking below 17,500 in the intraday territory, Nifty moved in the weak territory, and bears had full charge to close the index with losses of around 350 points.

“Nifty formed a bearish candle on a daily and weekly scale. It wiped off its gains of the entire week and formed a Bearish Engulfing sort of candle on the weekly frame,” said Chandan

, Vice President and Analyst-Derivatives, .

“Now, till it holds below 17,777 zones, weakness could be seen towards 17,442 and 17,250 zones, whereas hurdles are placed at 17,777 and 17,850 zones,” he said.

India VIX spiked 7.79% from 18.39 to 19.82 levels. Volatility spiked to higher zones which paved the way for the bears.

On the options front, the maximum Call open interest (OI) is at 18,000, which will act as a stiff resistance, followed by 18,500 strikes.

The maximum Put OI is at 17,500, which will act as strong support, followed by the 17,000 strikes. Call writing is seen at 17,700, then 17,800 strikes, while Put writing is seen at 17,500, then 17,600 strikes.

“Option data suggests a shift in a trading range between 17,000 to 18,200 zones, while an immediate trading range in between 17,300 to 17,800 zones,” highlights Taparia.

Nifty Bank

Nifty Bank plunged over 1 per cent on Friday to close at 40,776. The fall was led by losses in

, , , and .

The index formed a small-bodied Bearish candle on the daily scale. For bulls to take control, the index must close above 42,000, suggest experts.

“The Bank Nifty index witnessed some profit booking at higher levels after being an outperforming index. The index will resume its uptrend once it closes above the level of 42,000 where a significant amount of call writing has been witnessed,” Kunal Shah, Senior Technical Analyst at

, said.

“The downside support stands at 40,000-39,800, and any dip toward that would be an opportunity to buy,” he added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)