Nifty stuck in a range; 15,000 becomes a key level to watch out for!

Nifty opened the session with a gap-up and as the day progressed, it made an attempt to cross its previous day’s high level but failed to decisively move above the previous day’s high.  

At the same time, it failed to move above the R1 and 20-hourly moving average, and once again, the pullback was used to offload the positions. This was quite evident from the fact that the index gradually started to pare all its morning gains and slipped into the negative terrain. However, the downside remained capped, but the index has closed down by 140 points from the day’s high and ended the day in red for the third trading session at 14,910 levels.   

The broader indices ended the day in green and it has outperformed the frontline indices with Nifty Mid-cap and Small-cap adding 0.40 per cent and 0.30 per cent, respectively. The volatility index extended its downfall as India VIX cooled off by 4.88 per cent to the 20.19 mark.   

The price action of the day has formed a bear candle, which stayed within the range of the previous candle on the higher side. It did attempt to move above the previous bar high, but since, it went higher only by 3 points, it moved back inside the range. Technically, the index has retraced almost 50 per cent of the downfall from the high of 15,336 to the low of 14,745.85 levels. And the index has once again closed below the opening level and sustained below the 20-DMA for the second consecutive day on Tuesday.   

The MACD histogram is showing that the bearish momentum has increased. And the RSI is approaching its prior swing low. Considering the above factors, one can certainly draw a conclusion that bears have an upper hand.   

Meanwhile, considering the option data, there is one important takeaway that despite the fact that the index has closed below the 15,000 levels, the 15,000 put options have seen the addition of nearly 4,762 contracts in the open interest and with this, the total open interest stands at 25,133 contracts. On the other hand, 15,000 call options have added 8,936 contracts in the open interest and with this, the total concentration of open interest at 15,000 call option stands at 42,327. So, from this, there is a clear indication that there is a tug-of-war between the bulls and bears around the 15,000 mark. If the bulls have to regain strength, they have to first register a close above the 15,000 mark while on the other hand, if bears have to tighten their grip, they have to keep bulls below the 15,000 mark.   

On the downside, the 50-DMA (14,717) is a crucial support level in the near term and on the upside, the zone of 15,000-15,100 would continue to act as a strong hurdle for the bulls.