How is Nifty likely to behave on January series F&O expiry?

Nifty extended its fall for the fourth consecutive day while closing with a sharp loss of 1.91 per cent below the important psychological mark of 14,000.  

All the Nifty sectoral indices, except Nifty FMCG, ended lower. Besides, Nifty Private Bank index became the top loser, down by 3.05 per cent. India VIX jumped nearly 5 per cent and for the third day in a row, the FIIs turned net sellers. On Wednesday, they sold a massive amount of Rs 1,688.22 crore.   

The price action of the day has formed a bearish candle, carrying lower high & lower low. Nifty has corrected nearly 5.5 per cent from the all-time high and closed below its prior swing low. Further, Nifty closed at the day’s low as well as below the 34-EMA. The RSI fell below the 50 mark while the MACD histogram increased further and reached towards the September low. The negative movement indicator i.e. the -DMI closed above the +DMI, which means that the bears had an upper hand.   

Going ahead, the zone of 13,800-13,751 is a very crucial support level as it is a confluence of 61.8 per cent retracement level of the recent rise and also, the gap area of January 28 is placed in this region. On the upside, the immediate resistance is placed at 14,140 levels, followed by 14,310. Until and unless the index stays below its 20-DMA, which is placed at 14,310 levels, sell-on-rise would be the perfect strategy.