The headline index tested fresh lows during the session and ended with a loss of 133 points, or 0.93 per cent.
On Wednesday, when the market opens after Tuesday’s trading holiday on account of Republic Day, it will have to adjust to the global trade setup that remains particularly weak. There are high possibilities that we will see a weak start to the session and Nifty will open below the support line of the recent consolidation zone.
If that happens, the 14,250 level will become a key resistance for the immediate term. It will be the penultimate session of the January derivative series. Weekly options expiry data showed highest Put OI concentration at 14,000 level, which indicated that this level will act as immediate support for Nifty.
On Wednesday, the 14,300 and 14,335 levels are likely to act as key points of resistance while supports will come in at 14,100 and 14,015 levels.
The Relative Strength Index (RSI) on the daily chart stood at 53.87 level; it has marked a fresh 14-period low, which is a bearish indication. The RSI, however, remains neutral and does not show any divergence against the price. The daily MACD is bearish, as it trades below the signal line.
A strong black candle emerged on the charts. This showed that the directional consensus among the market participants on the downside.
Pattern analysis showed Nifty has ended below its short-term 20-DMA, which currently stands at 14,308 level. This level, too, is likely to offer some resistance as and when the market attempts a pullback.
All in all, the market bias is likely to stay weak over the immediate short term. Nifty shall consolidate and prevent any incremental downside only if it manages to stay above 14,250 level. As long as Nifty remains below this point, it will offer some more room for additional weakness.
The preference for defensive stocks was evident on Monday, and this trend is likely to continue in the next trading session as well. A cautious approach is advised for the day.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at firstname.lastname@example.org)