According to experts, the Nifty is likely to continue in consolidation mode, with a big upswing only being probable above 17,800. On September 7, the Nifty closed lower for a second day despite managing to reduce losses in the afternoon trade on yet another day of erratic trading.
The index declined from 17,519 at the start of the day to a low of 17,484 before rising to 17,650 in the afternoon. At 17,624, the index eventually closed 31 points lower.
On daily charts, the index created a bullish candle as a result of the rebound from the initial tick, but it still traded between 17,400 and 17,800. According to experts, the index is expected to remain range-bound and needs to surpass 17,800 to increase.
“Despite purchasing on dips, the market appears to be moving sideways in the near term as the index is consolidating between 17,777 and 17,401.
Therefore, it is unlikely that Nifty would make a significant move in either direction until it breaks out of the mentioned range “Founder and Chief Market Strategist of Chartviewindia, Mazhar Mohammad, stated.
According to him, traders should wait before opening positions in the breakout’s direction.
The market was dragged down by auto and bank sectors, while purchasing in FMCG, IT, and pharma companies limited the losses.
The broader market has continued to outperform the benchmark. On good breadth, the Nifty Midcap 100 index gained half a percent while the Nifty Smallcap 100 index gained 0.8 percent.
On the NSE, more than five shares climbed while four declined.
The India VIX, which indicates projected volatility over the next 30 days, went down 0.8 percent to 19.37 levels, which experts see as negative for the market.
The Nifty is expected to trade in a wider range of 17,200-18,000 in the next sessions, according to options data.
The greatest Call open interest was at 18,000 strike, which will remain a critical hurdle in the future days, followed by 18,500 strike, with Call writing at 17,500 and 17,600 strikes.
The largest Put open interest was at the 16,000 strike, which might operate as a critical support for the Nifty, followed by the 16,500 and 17,500 strikes, with Put writing at the 17,500 strike, followed by the 17,600 and 17,200 strikes.
Banking index
The Bank Nifty opened lower at 39,338 and has maintained with a bearish bias in the 39,300-39,550 area. The banking index sank 211 points to 39,456, forming a small-bodied bullish candle with a close higher than the starting level.
The index is trapped in a 1,500-point range, with strong resistance near 40,000 and support around 38,500.
According to Kunal Shah, Senior Technical Analyst at LKP Securities, the index will trend if either side breaks.
Immediate support is at 39,200, and if it is breached, the index might fall to the 38,800-38,500 range. As long as the support level is held, he believes the bias will continue on the purchase side.
