Trend looks strong, Nifty needs to sustain above 23,000 for further upward journey

Finally, the Nifty 50 touched the much-awaited psychological 23,000 mark for the first time but could not sustain it on a closing basis on May 24. This suggests that 23,000 is expected to be a critical hurdle for the index. Surpassing and sustaining this level on a closing basis can drive the index towards the next hurdle, i.e., 23,100-23,200, which is placed at the upper band of the rising channel. Meanwhile, 22,800 is likely to be a key support area, experts said.

The Nifty 50 touched an intraday record high of 23,026 before closing the volatile session at 22,957, down 11 points, and formed a small bullish candlestick pattern with a long upper shadow on the daily charts, indicating selling pressure at higher levels. The index continued to form higher highs for the tenth consecutive session.

After the Bullish Piercing Line pattern formation in the previous week, the index continued its uptrend and formed a robust bullish candlestick pattern on the weekly charts with higher highs and higher lows, indicating the positive trend. The index reported 2 percent gains for yet another week.

In this scenario, traders should maintain a positive bias, with any dip toward the previous resistance of 22,800 likely acting as a buying opportunity, Rajesh Bhosale, technical analyst at Angel One, advised.

He feels the only concern is the benchmark index approaching the upper band of the ‘Rising Channel,’ which has been a turning point in recent months. “This zone, around 23,100-23,200, should be closely watched,” he said.

Therefore, the approach would be to buy on dips around 22,800 and to book profits around 23,200, he added.

The options data suggested that 23,000 is the key hurdle for the Nifty 50, as crossing this level can open doors for 23,500, while 22,500 is the crucial support.

On the monthly options front, the maximum Call open interest was seen at the 24,000 strike, followed by the 23,500 and 23,000 strikes, with maximum Call writing at the 24,000 strike, then the 23,500 and 23,900 strikes. On the Put side, the 23,000 strike holds the maximum open interest, followed by the 22,500 and 22,000 strikes, with maximum writing at the 23,000 strike, then the 22,500 and 22,900 strikes.

Bank Nifty

The Bank Nifty extended its upward journey and sustained a higher highs-higher lows formation for the second consecutive session, although the volume was lower than average. The banking index rallied 203 points to 48,972 and formed a bullish candlestick pattern on the daily charts, although it failed to hold on to the 49,000 mark touched in intraday trade, which is crucial for further upward movement.

Going forward, “sentiment is likely to remain positive as long as the index stays above 48,500. Any dips towards 48,500 might attract buying interest,” Rupak De, senior technical analyst at LKP Securities, said.

On the higher end, he feels immediate resistance is placed at 49,000, above which the index might move towards 49,500. “On the lower end, immediate support lies at 48,800,” he added.

Meanwhile, volatility seems unlikely to reduce until the release of the Lok Sabha election results due on June 4, as the India VIX sustained above the 21 mark for four days in a row, rising 1.54 percent to 21.71 from 21.38 levels.

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