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After a significant correction on January 17, experts expect the Nifty 50 to fall further in the coming days and may take support at around 21,450, the low of the current month. If this level gets broken, then 21,000 is considered a possibility. On the higher side, 21,650 is expected to be an immediate resistance, followed by 21,750-21,850 area.

Bears were in full action on January 17, pulling down the benchmark indices by more than two percent, marking the biggest single-day decline in the last 19 months. Sharp sell-off in HDFC Bank post quarterly earnings and weak global cues weighed down on the sentiment.

The BSE Sensex tanked 1,628 points or 2.23 percent to 71,501, while the Nifty 50 plunged 460 points to 21,572 and formed a bearish candlestick pattern with a long upper shadow on the daily charts.

Technical Analysis:

The huge opening downside gap remains partially filled. Technically, Wednesday's pattern indicates a significant reversal pattern on the downside, and the unfilled opening downside gap could be considered as a bearish breakaway gap. Normally, such bearish breakaway gaps are formed near important top reversals. Hence, there is a higher possibility of Nifty sliding further down to the next lower support of 21,000 levels in the near term. Immediate resistance for sell on rise is around 21,750-21,850 levels.

Both price and momentum indicators are pointing towards weakness. The ideal strategy to trade this fall would be to sell on rise near the resistance zone (21,800 – 21,820).

The broader markets also participated in the bear party, with the Nifty Midcap 100 and Smallcap 100 indices declining over a percent each. Market breadth favored bears, with about three shares declining for every rising share on the NSE. Volatility spiked significantly, making the trend favorable for bears, with the India VIX jumping 11.1 percent to 15.08 level.

Key Support and Resistance Levels:

Nifty: Immediate support at 21,543, followed by 21,472, and 21,357. Immediate resistance at 21,600, followed by 21,844, and 21,959.

Bank Nifty: Expected to take support at 45,948, followed by 45,657, and 45,186. Resistance at 46,177, followed by 47,181, and 47,652.

Options Data:

Nifty Call Open Interest: Maximum at 21,800 strike, followed by 22,000 and 22,100.

Nifty Call Writing: Significant writing at 21,800, 21,700, and 21,600 strikes.

Nifty Call Unwinding: Maximum at 22,600, followed by 22,400 and 22,900 strikes.

Nifty Put Open Interest: Maximum at 21,000 strike, followed by 21,500 and 21,300.

Nifty Put Writing: Significant writing at 21,000, 21,100, and 21,400 strikes.

Nifty Put Unwinding: Maximum at 22,000, followed by 21,900 and 21,700 strikes.

Stocks Activity:

High Delivery Percentage: Hindustan Unilever, Godrej Consumer Products, Infosys, Power Grid Corporation of India, and HDFC Life Insurance Company.

Long Build-Up (10 stocks): Oracle Financial, BHEL, ICICI Lombard General Insurance Company, Apollo Hospitals Enterprise, and Gujarat Gas.

Long Unwinding (70 stocks): Chambal Fertilisers & Chemicals, Aditya Birla Fashion & Retail, National Aluminium Company, BPCL, and India Cements.

Short Build-Up (80 stocks): HDFC Bank, SAIL, Kotak Mahindra Bank, IDFC First Bank, and Asian Paints.

Short Covering (26 stocks): L&T Technology Services, Metropolis Healthcare, Polycab India, Indian Oil Corporation, and SBI Life Insurance Company.

Market Indicators:

Nifty Put Call Ratio (PCR): Dropped sharply to 0.7 on January 17 (the lowest since December 20 last year), indicating an increase in bullish sentiment.

FII and DII Data: FIIs sold shares worth Rs 10,578.13 crore, while DIIs bought Rs 4,006.44 crore worth of stocks on January 17.

Stocks in Focus (Results on January 18):

IndusInd Bank, 360 ONE WAM, Finolex Industries, Home First Finance Company India, IndiaMART InterMESH, Innova Captab, Jindal Stainless, Mastek, Metro Brands, Polycab India, Poonawalla Fincorp, Ramkrishna Forgings, Shoppers Stop, South Indian Bank, Supreme Petrochem, Sterling and Wilson Renewable Energy, and Tata Communications.

Stocks in the News:

LTI (Mindtree): QoQ net profit growth of 0.6 percent at Rs 1,169.3 crore for Q3 FY24, due to weak operating margin performance.

Happiest Minds Technologies: On-year net profit growth of 3.5 percent at Rs 59.6 crore for October-December quarter of FY24.

Alok Industries: Consolidated net loss at Rs 229.2 crore for Q3 FY24, narrowing from a loss of Rs 249.83 crore in the year-ago period.

Som Distilleries and Breweries: On-year consolidated profit growth of 71 percent at Rs 18 crore for October-December quarter of FY24.

Other Highlights:

Preferential allotment of equity shares to raise up to Rs 250 crore approved by Nazara Technologies.

Proposal of alteration in share capital by sub-division/split of existing equity shares considered by Persistent Systems.

F&O Ban List for January 18 (13 stocks):

Indian Energy Exchange and SAIL added, while Aditya Birla Fashion & Retail, Ashok Leyland, Bandhan Bank, Chambal Fertilisers & Chemicals, Delta Corp, Hindustan Copper, Metropolis Healthcare, National Aluminium Company, Polycab India, PVR INOX, and Zee Entertainment Enterprises retained. Biocon, India Cements, Indus Towers, and Piramal Enterprises removed.

Disclaimer: The views and investment tips expressed by experts are their own, and investors are advised to verify information before making any investment decisions.