The sell-off on Monday resulted in the Nifty ending below various short-term averages, which signals near-term bearishness. Nifty is currently trading below the 50-day moving average of 17,505. It is also below the 100-day moving average of 17,640 and the 20-day moving average of 17,776.
“17,000 has the highest put concentration for the January series so there is a probability the market will try to hold that level but if it breaks that level, a fall to 16,700 cannot be ruled out,” said Rajesh Palviya, head-technicals and derivatives at Axis Securities. “17,350 would be an important level to watch out for in the coming days. My view is that the Nifty is likely to break 17,000 on the downside.”
The 21% spike in the Volatility Index or VIX, which measures markets’ perception of risk in the near term, to 20.84 on Monday points to the likelihood of further decline.