Nifty finally showed intent to do something right. The markets halted their unabated move, retreated, and ended the day on a negative note. Nifty opened on a soft note but soon crawled inside positive territory to mark the high point of the day. However, after staying in the positive zone for some time, it again slipped into the negative zone.
The market continued to decline and showed no intention of recovering any time soon. The Nifty closed with a net loss of 101.70 points or 0.64 percent, down nearly 14 points from the day’s high.
The market range remained very weak due to the fall in 41 out of 50 Nifty stocks. We have weekly options expiration coming up, and Wednesday’s session provided some serious insight. 15800, 15850, and 15900 saw heavy call writing; 15,800 strikes added over 3.4 million shares.
Incall OI. 15,900 continues to have a maximum call OI of 6 million. This means that Nifty is on some corrective steps till Thursday Rs 15,800 is not pulled out. Clearly, the upside is very limited even if the market manages to creep above 15,800.
Despite the corrective measures, volatility did not increase much. India VIX rose marginally by 1.78 percent to 14.8650. Importantly, Put OI unwinding at 15,800, 15,850, and 15,900 levels also definitely indicates the onset of weakness unless there is some tactical change. Nifty price action against the 15,800 level will be very important to watch for Thursday’s session.
The 15,800 and 15,860 levels will act as resistance; Support will come at 15,680 and 15,600 levels.
The relative strength index (RSI) on the daily chart is 65.44; It crossed below 70 from an overbought zone, which is bearish. The RSI is neutral and shows no divergence against the price. The daily MACD is bullish. However, the slope of the histogram is decreasing, and it is on the verge of giving a negative crossover. Apart from the black body that happened, no other structures were seen on the candles.