Nifty 200 DMA Slumps; NSE Down 10% from its Peak

Over concerns mounting around poor earnings and high FII outflows, the NSE 50 was below its 200-DMA (Displaced Moving Average) last Thursday. This downturn was witnessed for the first time in 19 months. The NSE index has slumped more than 10% from its peak and is expected to be in correction mode.

Notably, Nifty has formed a doji candle near its 200-day exponential moving average (DEMA). The 200-DEMA is pegged at around 23,540. Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates says that a range between 23,500-23,540 will act as an immediate support zone for the index.

While in Bank Nifty’s case, the index has formed an inverted hammer candle, which thereby indicates its strength nearing the crucial support of 200-days exponential moving average (DEMA).

Key Insights from Nifty, Bank Nifty options data

Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities said that increased call writing activity from 23,600 to 24,000 indicates surging seller strength, while a reduction in put writing indicates a bearish sentiment. The Put-Call Ratio (PCR) jumped from 0.54 to 0.73.

Bank Nifty options data indicates a bearish sentiment with a surge in call writing from 50,500 to 51,000, while the maximum pain level stands at 51,000 levels, an analyst from SAMCO Securities said.

Currently, shares of Aarti Industries, Aditya Birla Fashion Retail, GNFC, Granules India and Hindustan Copper are placed under the F&O ban period on today’s (Monday) trading session.