Sensex, Nifty crash over 1% ahead of F&O expiry; FIIs’ sell-off, weak technicals may pull Nifty down to 15500

Sensex, Nifty crash over 1% ahead of F&O expiry; FIIs’ sell-off, weak technicals may pull Nifty down to 15500

BSE Sensex and Nifty 50 tanked over one per cent in intraday deals on Wednesday, one day before weekly F&O expiry. The benchmark indices were pulled down on the back of selling in index heavyweights such as Infosys, Reliance Industries Ltd (RIL), ITC, Larsen & Toubro (L&T), and Bajaj Finance among others. So far in the day, BSE Sensex has hit a day’s low of 53,519.30, while NSE Nifty 50 fell to 15,992.60. Indian stock markets were also seen mirroring global markets. Moreover, stricter COVID-19 lockdown in Shanghai, and weekly F&O expiry due on Thursday, also added to the woes. Analysts said that continuous FIIs selling, and weak global cues were also among major reasons behind the D-Street crash. On the charts, both BSE Sensex and Nifty 50 were ruling below long-term and short-term moving averages, due to which, analysts see more weakness in markets going ahead, where Nifty may tumble down to 15500, and BSE Sensex to 52500.What’s dragging BSE Sensex, Nifty 50 today?

The benchmark indices were in a correction mode taking cues from selling in the global markets. The increase in inflation and ongoing geopolitical tensions are getting worse day by day, an analyst said. Another factor which added more worries to the markets worldwide is the tightening lockdown in Shanghai due to the recent Covid outbreak. “The rate hikes by the central banks to curb the soaring inflation has further put the markets under pressure. Nifty may remain under pressure for some more trading sessions and may touch the levels of 15700 in near term. Long positions must be avoided right now. Sensex and Bank Nifty will witness selling pressure to the levels of 52000 and 33500 respectively,” Ravi Singh, VP & Head of Research, Share India Securities, told FinancialExpress.com.

Analysts also noted that the continuous selling pressure from FIIs was dragging the markets lower. While weak global cues and nothing major surprise on quarterly earnings from the corporates kept the buyers on backfoot. “NSE Nifty and BSE Sensex both were trading below their all important long-term and short-term moving averages, which indicate weakness ahead. Though the market is in oversold territory, still there is no signal of pullback/reversal on near term charts,” Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities, told FinancialExpress.com.

Markets to remain highly volatile

India VIX, the volatility gauge, was also above 23.50 levels, which suggests that the market is going to remain highly volatile and under selling pressure. Palviya also added that if NSE Nifty 50 breaks below 16000 level then it may go down further towards 15700-15500 level in the short term. However, 16300-16400 are likely to act as a resistance zone in the near-term. Rajesh Palviya advised using minor pullback action as a shorting opportunity in markets. “BSE Sensex is forming lower top lower bottom formation, indicating sustained weakness . If the 30-share index Sensex breaks below 53500 level then it may fall further towards 53000-52500 in the coming week. One should adopt a sell on rise strategy until Sensex is trading below 54500 levels,” he added.

Nifty’s strong support still at 16000

Milan Vaishnav,  CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, said that the technical setup got particularly weaker after the Nifty violated the multiple support area near 17000 levels. However, from a technical standpoint strong support exists in the 16000-16150 area. “So, it would be crucial to see Nifty’s price behavior vis-a-vis the level of 16000 which we feel will lend strong support to the markets. The options data suggest maximum PUT OI for Nifty at 16000 level and for Bank Nifty at 34000,” he said. Vaishnav said that as of now, indices are less likely to violate/breach this level. “On the higher side, Nifty has resistance at 16400 and Nifty Bank at 35300 in the immediate short-term,” he added.

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