Market trims losses: Nifty bounces back from 200-WMA on expiry day

Indian equity benchmarks pared some of their losses in Tuesday's session after the NSE Nifty50 index slipped below its 200-week moving average (200-WMA) on the monthly expiry day.

Nifty touched a low of 22,569.65, below the 200-WMA level of 22,607. At last check, the index was trading at 22,659.60, down 120.65 points or 0.53 per cent from the previous close.

Nifty has decisively breached this moving average only twice in the past -- in 2008 during the Global Financial Crisis (GFC), a financial shock, and in 2020 during the Covid-19 pandemic.

Sudeep Shah, Vice-President - Technical and Derivatives Research at SBI Securities, said the benchmark indices witnessed a recovery on the monthly expiry day after a weak start.

"The frontline indices witnessed a strong recovery on the monthly expiry day, supported by India VIX cooling below the 14 mark. Despite heightened volatility and a negative start to the session, Nifty staged a smart rebound from lower levels, led by strong buying in frontline banking counters," Shah said.

Among the major sectoral indices, Nifty Pharma was the top-performing segment, while Nifty Consumer Durables was the worst-performing.

Shah said the 22,540-22,560 zone would act as a crucial support for Nifty, while resistance was seen in the 22,850-22,870 range.

"On the downside, if the index slips below 22,540, then the next support is placed in the zone of 22,370-22,390. In the event of a surge above 22,870, the index can experience an extension of the rally towards 23,020," Shah added.

On the options front, Shah said, "Meaningful call writing was witnessed across 22,800 and 22,900 strikes. On the put side, 22,700 has a substantial open interest, followed by the 22,600 strike."

Meanwhile, the 30-share BSE Sensex slipped to 72,064.24 in early trade before recovering some ground. It was last trading at 72,380.77, down 390.95 points or 0.54 per cent.

For Sensex, Shah said, "Support is at 72,100, while resistance is at 73,000."

The domestic benchmark indices have remained under pressure in recent sessions, with investors tracking movements in crude oil prices, the US dollar, global bond yields and foreign fund flows.