The Nifty 50 hit a fresh record high and reached very close to the upper band of the rising channel, but a bear attack wiped out all those gains in the last hour of trade. Consequently, the index could not sustain above the 23,000 mark on a closing basis for another session on May 27, as participants maintained caution ahead of the Lok Sabha election results due on June 4. The volatility, which reached a two-year high, is likely to remain elevated until the election results, with the index expected to consolidate around the 23,000 mark, experts said. The resistance for the index is expected at 23,200, as closing above this level can open doors to 23,500, which is a possibility only in the June series, while support is likely at the 22,800-22,600 levels.
The Nifty 50 fell 25 points, or 0.11 percent, to 22,932, forming a bearish candlestick pattern on the daily charts but maintained a higher highs formation for 11 days in a row, trading above all key moving averages.
Meanwhile, the Bank Nifty has outperformed the benchmark Nifty 50, rising 310 points, or 0.63 percent, to close at 49,282, although it lost more than 400 points from the day’s high. The index has formed a bullish candlestick pattern with a long upper shadow on the daily charts and sustained a higher highs-higher lows formation for the third consecutive session. It is likely to trend higher with momentum indicators RSI (placed at 63.53) and MACD showing a positive bias. It is likely to face resistance at 49,500 and then 50,000 marks, while support is placed at 49,000 and then 48,600 levels, experts said.
Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities
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The daily momentum indicator MACD (Moving Average Convergence Divergence) is well into the buy mode; however, the hourly momentum indicator has gone into the sell mode, hence it can be a range-bound to positive session. Since the index has broken out from its previous range of 22,800-21,800, the overall trend remains up, but since it’s the monthly expiry week, the immediate range is 22,800-23,200 levels. Above 23,200 levels, it can inch upwards further towards 23,500 levels, whereas, on the flip side, if 22,800 levels are broken on a closing basis, then it may again get into a downtrend towards 22,600-22,500 levels.
The Nifty PCR is at 0.87 levels indicating that the Call writers have an upper hand. However, the maximum Call open interest is at 24,000 levels and thereafter at 23,500 levels, so on an immediate basis, there is not much of a hurdle until 23,200 to 23,500 levels; rather, there is good addition seen on the Put side from 23,100 to 22,800 strikes. Hence, the near-term view is sideways to bullish until 22,800 levels are held on a closing basis. Nifty is also trading above its monthly VWAP (volume-weighted average price) level quite comfortably as well as above its maximum pain level indicating support at the lower levels.
Key Resistance: 23,200
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Key Support: 22,800
Strategy: Buy on dips, Target at 23,200
Stop-Loss: 22,750
Mehul Kothari, DVP – Technical Research at Anand Rathi Shares & Stock Brokers
Technically, the index is hovering near the upper band of the rising channel which the markets have been respecting for many months. A breakout from this band during live trading sessions seems a bit difficult for the time being. Any breakout is expected to be on election results day. For the coming session, 23,100 – 23,200 would be a strong hurdle while on the downside, 22,700 seems to be an immediate support.
Key Resistance: 23,100, 23,200
Key Support: 22,700
Strategy: Buy on dip near 22,800, 22,700
Stop-Loss: 22,500
Santosh Meena, Head of Research at Swastika Investmart
The Nifty faced profit booking near the resistance trendline around 23,100. However, the overall bullish trend remains intact. Dips around 22,800 could present good buying opportunities. A breakout above 23,123 could signal a move towards 23,500. If the price falls below 22,800, the rising 20-day exponential moving average (20-DEMA) at around 22,525 will be crucial support.
Key Resistance: 23,123, 23,330, 23,500
Key Support: 22,800, 22,625, 22,525
Strategy: Consider buying near 22,800
Stop-Loss: Below 22,500
Bank Nifty Outlook and Positioning
Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities
The momentum indicator MACD has provided a bullish crossover on its daily as well as weekly charts, which indicates a short-term uptrend. The upper end of the rising channel now comes to 50,000 and thereafter 51,000 levels, whereas on the lower side, 48,000 is the crucial immediate support. Hence, the short-term range is 48,000 to 50,000 and 51,000 levels. The Bank Nifty PCR (Put Call ratio) is at 0.98, which is almost neutral, and on the higher side, there is strong Call writing at the 50,000 strike; hence for this expiry, that may act as resistance.
On the flip side, the 48,000 strike has witnessed strong Put writing, hence the range for this monthly expiry is 48,000-50,000 levels. Since the short-term momentum is positive, buy on dips should be the strategy for this week at least until the expiry, but since there is high volatility, profit booking at higher levels is also advised.
Key Resistance: 50,000
Key Support: 48,750
Strategy: Buy, Target at 50,000
Stop-Loss: 48,750
Mehul Kothari, DVP – Technical Research at Anand Rathi Shares & Stock Brokers
Last time we stated that we expect some more upside in the Nifty Bank index towards 48,800, which is the 61.8 percent of the recent fall. Well, the index cleared that and has closed above the 49,000 mark. However, in Monday’s session, we witnessed selling from the high of 49,688, and this resulted in a reversal candlestick pattern on the daily scale. Thus, fresh buying can be done only above 49,688, whereas on the downside, 49,000 – 48,600 can be a decent support for the coming session.
Key Resistance: 49,700, 50,000
Key Support: 49,000, 48,600
Strategy: Buy on dips near 49,000
Stop-Loss: 48,600
Santosh Meena, Head of Research at Swastika Investmart
Bank Nifty saw profit booking near the resistance zone of 49,500-50,000. Despite this, the overall trend remains bullish. A dip towards 49,000 presents a potential buying opportunity with strong support. The 48,600-48,400 zone could act as a key demand area if the price falls further. A breakout above the psychological barrier of 50,000 could signal a move towards 51,000.
Key Resistance: 49,600, 50,000, 51,000
Key Support: 49,000, 48,500, 48,000
Strategy: Consider buying near 49,000 for potential upside
Stop-Loss: Below 48,500
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