Nifty: Tighten your seat belts, high volatility on cards on September Series F&O expiry!

Nifty ended Wednesday’s session with a modest loss. However, the action was witnessed throughout the day as at one point, the index entered into positive territory and marked a high of 17,781. However, it failed to sustain at higher levels and thus, slipped lower.   

The broader markets outperformed the frontline gauge with Nifty Midcap 100 and Smallcap 100 advancing by 1.08 per cent & 0.41 per cent, respectively. Among the sectoral indices, Nifty PSU Bank and Nifty Metal were the top two gainers.   

Nifty recovered almost 100 points from the day’s low and ended the day above the 17,700 mark. Interestingly, it took support around the rising trend line and as the price was capped within the high-low range of the prior bar session, it formed an inside bar.   

The formation of an inside bar ahead of the F&O expiry of the September series indicates high volatility on the cards. As long as the index manages to hold above the recent swing low of 17,576, be with a positive bias as dips could be bought. However, failure to hold this level could result in a fall up to the levels of 17,440-17,400.   

On the upside, the zone of 17,800-17,840 is likely to act as a stiff resistance. There is one interesting observation on the lower timeframe i.e., the hourly chart. The RSI has formed a double top and that too below the 60-level. What more striking is the fact that the neckline of this double top pattern is placed at a level of 40. Hence, if the RSI on the hourly timeframe slips below the 40-mark, it’s time to be on cautious mode.