Nifty closed 1.73% lower or 125 points down at 7,110, bearish sentiment dominated the session and sensex closed 1.59% or 378.61 points lower. Geopolitical uncertainty and bank stocks influenced investors sentiment to walk against the trend.
Price action started with a bearish note from the opening time at key level 7,225. Formation of large bearish candlestick, gave early sign of selling pressure and intention of bears to dominate the session. When large and significant candlesticks are visible at market opening levels, it tells a lot of information about volatility and structure. High volume activity in the beginning of the session, showed the willingness of sellers to initiate large orders, on the market open.
Nifty went into slow and steady consolidation until 12.05pm, absence of strong selling pressure and profit taking from floor traders resulted in corrective price action. These range bound market movements took place between 7,180 and 7,160. An interesting point is to notice, how range bound price action took place within the previous candle’s high and low, which formed at 10.15 am. This is another indication of selling pressure’s momentum. (Look at the chart)
Another round of sell off started at 12.15 pm, driven by low conviction, as Nifty didn’t show enough volume to prove the movements. Most likely these movements are driven by weak hand players and retail traders. Later, a new round of consolidation driven by corrective price action started at 1.00 pm with formation of rejection bar at 7,115 (also called as pin bar). This consolidation lasted until 2.50 pm, precisely 40 minutes before the market close. At 2.55 pm, Nifty started another selloff which initially broke the key level 7,110 at Market close. Traders should keep an eye on support level 7,100, Watch price action closely around 7,100 to 7,115 at tomorrow’s market open.
