Experts believe that volatility is expected to remain high and the Nifty may continue to consolidate, with a crucial hurdle on the higher side at 23,000.
The high India VIX suggests that market volatility might remain elevated," Rupak De, senior technical analyst at LKP Securities, said.
Volatility jumped to a fresh two-year high on Tuesday, ahead of the monthly F&O expiry on Thursday and the general election results next week.
On the monthly options front, the maximum Call open interest remained at the 24,000 strike, followed by the 23,500 and 23,000 strikes, with maximum Call writing at the 23,000 strike, followed by the 23,100 and 22,900 strikes.
The 23,000 level is expected to be key resistance for the Nifty on the higher side, while 22,500 is likely to be crucial support.
Market Trend
The Nifty 50 has seen rangebound trading and consolidated below the psychological 23,000 mark throughout the session on May 28, as market participants maintained caution ahead of the last phase of the Lok Sabha election, followed by exit polls due on June 1. However, it managed to hold on to 22,800, the immediate support for the index. Experts believe that volatility is expected to remain high and the Nifty may continue to consolidate, with a crucial hurdle on the higher side at 23,000.
The Nifty 50 extended its downtrend for three days in a row amid the consistent fight between bulls and bears, declining by 44 points to 22,888, and formed a bearish candlestick pattern on the daily charts with a lower high, lower low formation. However, the index still traded well above all key moving averages.
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"The index remained within a range as the lack of a breakout on either side failed to provide any directional movement. The high India VIX suggests that market volatility might remain elevated," Rupak De, senior technical analyst at LKP Securities, said.
Volatility jumped to a fresh two-year high on Tuesday, ahead of the monthly F&O expiry on Thursday and the general election results next week. The India VIX rose 4.32 percent to 24.20, the highest closing level since May 25, 2022.
On the higher end, Rupak feels the 22,950-23,000 zone might act as a strong resistance for the Nifty 50, and any rise may attract selling pressure. On the lower end, the Nifty might drift down towards 22,800/22,600, he said.
On the monthly options front, the maximum Call open interest remained at the 24,000 strike, followed by the 23,500 and 23,000 strikes, with maximum Call writing at the 23,000 strike, followed by the 23,100 and 22,900 strikes. On the Put side, the 22,500 strike holds the maximum open interest, followed by the 23,000 and 22,000 strikes, with maximum writing at the 22,900 strike, and then the 22,400 and 22,700 strikes.
The above options data indicated that, in comparison to the heavy Call writing, Put writers were less active. The 23,000 level is expected to be key resistance for the Nifty on the higher side, while 22,500 is likely to be crucial support.
Bank Nifty
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The Bank Nifty snapped a three-day winning streak and corrected 140 points to close at 49,142, forming a bearish candlestick pattern on the daily charts and showing some amount of exhaustion at higher levels.
Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas, believes that it is a routine profit booking and not a trend reversal.
Hence, "we shall continue to maintain our positive outlook on the index. In terms of levels, 49,000 - 48,800 is the crucial support zone while 49,350 – 49,500 is the immediate hurdle zone from a short-term perspective," he said.
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