Technical View | Nifty likely to consolidate before marching towards 22,500

The Nifty hit a new high of 22,187 on February 19 as the market closed in the green for the fifth consecutive session despite mixed global cues.

The 50-stock index gave up some of the gains later in the day to end 82 points higher at 22,122, a new closing high for the benchmark.

Experts expect the index to march to 22,500 in the coming sessions if it manages to hold above 21,900 but some consolidation can’t be ruled out.

The index formed a small-bodied bullish candlestick. The candle has long shadows on either side, indicating indecision among market participants regarding the direction, Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

“On the hourly charts, we can observe a negative crossover along with a divergence, which can lead to some correction towards the support zone 21,970–21,930 where the key hourly moving averages and the gap area formed on the February 16th is placed,” Gedia said.

In the immediate term, the Nifty can turn volatile as both the bulls and bears try to defend their positions.

In the short term, the Nifty can move towards 22,500-22,600, Rupak De, senior technical analyst at LKP Securities, said.

On the options front, the 23,000 strike had the maximum Call open interest followed by the 22,600 strike and 22,100 strike, with Call writing at the 22,200 strike, 22,300 and then 23,000 strike.

On the Put side, the maximum open interest was at the 22,000 strike followed by 21,000 and 21,900, with writing at the 22,100 strike and then 22,000 strike.

The data indicates that 22,200-22,300 will be the immediate resistance and 22,000 and 21,900 the support levels for the index.

Bank Nifty

Bank Nifty also gained for the fifth session, rising 151 points to 46,536. It formed a Doji candlestick pattern on the daily charts, indicating indecisiveness among bulls and bears.

“Despite the formation of Doji, the overall undertone remains bullish, suggesting a buy approach,” Kunal Shah, senior technical & derivative analyst, LKP Securities, said.

Immediate resistance is at 46,700 and a close above the level can trigger further short-covering moves towards the 48,000 mark.

On the downside, the immediate support is at 46,000, “coinciding with the area of the highest open interest on the put side, indicating a crucial level for potential price movements,” Shah said.

Volatility also spiked to climb above the 16 mark, which can create discomfort for the bulls. The India VIX, the fear index, rose 5.22 percent to 16.02.

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