Market witnessed selling pressure

Taking cues from the global markets, Nifty started Monday’s session with a gap down and corrected during the day to breach last week’s low of 16850. However, the index recovered from the lows in the last half-an-hour to end the day tad below 17000 with a loss of over 100 points.

On the back of global market uncertainty, our market has also been witnessing some selling pressure. However, the index is trading near a crucial support zone of 16850-16750 as we can see multiple support levels in this range. Firstly, it coincides with the support end of a falling channel, then a 100 percent extension of the previous correction is around 16900, the ’89 EMA’ support on the weekly chart is in this range and the previous swing low support of September 2022 is also in this range. Now, if we look at the daily chart, the Nifty has formed two doji candles towards the end of last week and formed a ‘Hammer’ candlestick pattern in Monday’s session. This indicates that bulls are trying to defend this zone and may like to lift the market higher from this level. However, the FII have record short positions in the index futures with 90 percent positions on the short side, and their short covering (whenever happens) will be the trigger for the pullback. So one should keep a close tab on this data and look for cues for the near-term directional move. In the options segment, the weekly series data indicates a hurdle around 17200 as this strike has the highest open interest outstanding. On the flip side, 16900-16800 put options have seen some build-up. 

On the higher side, 17150-17225 will be the immediate resistance range on pullback moves, and a breakout above this is required for the momentum to change. Traders should look for stock-specific trading opportunities and look for cues from the global markets as news flows from the globe are driving the trader’s sentiments at the moment.