Nifty momentum strong after new all-time highs, may touch 22,500 soon

It was yet another record-breaking week  for the Nifty, which hit a new high of 22,297 on February 23 and ended the week 172 points higher at 22,213. The benchmark index closed above crucial levels, signalling continued upward momentum towards 22,500.

The Nifty managed to close above the psychological support of 22,000 even as volatility eased. Here’s how technical analysts are positioning the Nifty and Bank Nifty:

Nifty 50 outlook

The Nifty index closed above the crucial resistance zone of 22,125-22,150 levels (previous all-time high) on a weekly closing basis and is expected to continue the upward trending activity. “It is expected to move towards the next resistance level of 22,500, either continuously from the current levels or after a minor dip/consolidation,” said Tejas Shah, Senior Vice President of Technical Research at JM Financial.

For the Nifty, support is at 22,125-150 and 22,000. On the higher side, the immediate resistance is at 22,250-300 and then 22,500.

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On the derivative front, open interest (OI) put call ratio (PCR) at 1.02, along with a drop in IV at 13.8, suggests a neutral options setup. The range of 22,000-22,500 has a major OI base set up by writers for the monthly expiry.

According to Akshay Bhagwat, Senior Vice President of Derivative Research at JM Financial, “Expiry pressure can lead to unwinding. Resistance is seen at 22,300-22,450, while support is at 22,150-22,000 zones.”

Bank Nifty outlook

Bank Nifty PCR for the monthly series is at 0.80. Significant call writing was observed at 47,000-47,200 strikes and 46,800-46,500 puts, implying a range of 46,500-47,300 for the coming few sessions. On the OI data front, Bank Nifty Futures lost 0.29 percent, while OI surged 1.56 percent.

“Immediate support for Bank Nifty lies at the 50 DMA zone of 46,550-46,600, and until this holds, the current momentum could strengthen up to 47,200-47,250 zone. In case 46,500 breaks, the Index can test its next support placed at 46,250-46,200,” Sudeep Shah, DVP and Head of Technical and Derivative Research at SBI Securities, said.

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