Hot Stocks: Immediate support for Nifty50 seen around 11650-11700
Episode 2256, Feb 25, 2020, 12:30 AM
The Nifty50 plunged 2 percent on the first day of the week, to close at 11835 on Monday. The Nifty opened down with a gap of 68 points and ended forming a Bearish “Island Cluster Reversal” candlestick pattern on the daily charts.
The Open and high of the session remained the same for Nifty, which indicates the dominance of the bears over bulls during the session.
The Nifty50 closed below its 20, 50 and 100-Days EMA indicating weakness in the short-term. The index breached its important support placed at 11,908 on the closing basis.
The immediate support for the Nifty comes in the range of 11750-11783, which happens to be the support provided by the gap formed on 4th Feb 2020.
The upward sloping trend line adjoining the bottoms of 19th Sep 2019 and 3rd Feb 2020 also coincides with the gap support.
In the Derivatives’ segment, we have seen the aggressive short build-up in the Nifty and Bank Nifty. The Nifty Open Interest Put Call Ratio fell sharply to 1.12 odd levels from 1.39 levels, mainly on the back of Call writing at 11900-12000 levels Indicating 12000 levels to act as a strong resistance going forward.
On the lower side, 11700 levels is likely to act as support where Puts have been written. This level also coincides with the 200-Day SMA support which is placed at 11680 odd levels
As far as resistance is concerned 12,000 seems to have become the ceiling for the Nifty. Considering the technical and derivatives evidence discussed above, we believe that the trend of the market has turned bearish.