Stock Market TrendThe Nifty 50 failed to hold on to fresh record high levels and finally closed moderately in the red after wiping out 178 points from day's high due to profit taking on April 30.
Story continues below Advertisement Remove AdTechnically, this pattern signals presence of crucial overhead resistance in the market around 22,800 levels.
"The larger degree of higher tops and bottoms is intact and Nifty is currently placed to form a new higher top of the pattern.
The weekly options data indicated that 22,800 is expected to be key hurdle on the higher side for the Nifty 50, with support at 22,500-22,400 levels.
The index has formed small-bodied bearish candlestick with long upper shadow on the daily charts, indicating selling pressure at higher levels.
Stock Market Trend
The Nifty 50 failed to hold on to fresh record high levels and finally closed moderately in the red after wiping out 178 points from day's high due to profit taking on April 30. Despite this profit booking, overall, the trend remains positive given the index traded above all key moving averages and maintaining higher highs, higher lows formation, but in immediate term, the index is likely to consolidate with immediate support at 22,500-22,400 levels and crucial support at 22,300, before getting back above the all-time high, experts said.
The Nifty 50 opened higher at 22,680 and climbed higher to hit a fresh record high of 22,783.35, but the last hour turned out to be weak as the index saw profit booking and finally settled 39 points lower at 22,605, forming bearish candlestick pattern on the daily charts.
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Technically, this pattern signals presence of crucial overhead resistance in the market around 22,800 levels. "The larger degree of higher tops and bottoms is intact and Nifty is currently placed to form a new higher top of the pattern. We need reasonable weakness from here to call this as a top reversal pattern," Nagaraj Shetti, senior technical research analyst, HDFC Securities said.
He feels further decisive upmove could only occur on a sustainable move above 22,850-22,900 levels. "Having placed at the hurdles, possibility of minor downward correction can't be ruled out from the highs in the short term. Immediate support is at 22,400," Nagaraj said.
The weekly options data indicated that 22,800 is expected to be key hurdle on the higher side for the Nifty 50, with support at 22,500-22,400 levels.
On the Call side, the maximum open interest was observed at 23,000 strike, followed by 22,800 and 22,900 strikes, with maximum writing at 22,800 strike, then 23,000 strike, while on the Put side, 22,500 strike owned the maximum open interest, followed by 22,000 and 22,400 strikes, with maximum writing at 22,700 strike, then 22,000 strike.
Bank Nifty
The Bank Nifty also traded higher and went closer to 50,000 mark by hitting a new record high of 49,975, but latter saw profit booking and closed 27 points lower at 49,397. The index has formed small-bodied bearish candlestick with long upper shadow on the daily charts, indicating selling pressure at higher levels.
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"Although the index fell short of reaching the 50,000 mark, the overall sentiment remains bullish. Dips in the index should be seen as buying opportunities, especially with strong support noted around the 49,000 mark, where the highest open interest lies on the Put side," Kunal Shah, senior technical & derivative analyst at LKP Securities said.
The rising volatility also seems to have made the bulls uncomfortable, as the India VIX, the fear gauge, jumped 5.19 percent to 12.87, from 12.24 levels, rising for fifth consecutive day. The VIX surged 26 percent in five days.
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