Market UptrendThe Nifty 50 closed above the 22,500 mark for the second consecutive session, despite volatility reaching near a 20-month high on May 21.
The index formed a bullish candlestick pattern on the daily charts, continuing the formation of higher highs for the seventh consecutive session.
According to Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas, the Nifty has been in the recovery process after testing the lower end of the rising channel on the daily charts.
On the Put side, the maximum open interest was observed at the 22,500 strike, followed by 22,400 and 22,000 strikes, with maximum writing at the 22,500 strike, then 21,800 and 22,200 strikes.
The VIX rose sharply by 6.26 percent to 21.81, the highest closing level since September 28, 2022, up from 20.53 levels.
Market Uptrend
The Nifty 50 closed above the 22,500 mark for the second consecutive session, despite volatility reaching near a 20-month high on May 21. Experts suggest that as long as the index holds at 22,400, which aligns with Tuesday's low and the mid of the Bollinger band, it is likely to move towards the 22,600-22,800 zone in the coming sessions, with intermittent consolidation. The crucial support area remains at 22,300-22,200 levels.
The Nifty 50 opened lower at 22,405 but gained strength in late morning deals, finally settling at 22,529, up 27 points, with above-average volumes. The index formed a bullish candlestick pattern on the daily charts, continuing the formation of higher highs for the seventh consecutive session.
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Moreover, it traded above all key moving averages, with an upward bias in the momentum indicator RSI (relative strength index) placed at 57, up from 56.16 levels on the daily charts, indicating a positive trend.
According to Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas, the Nifty has been in the recovery process after testing the lower end of the rising channel on the daily charts. It has now reached the 22,570 – 22,600 zone where resistance in the form of the 78.6 percent Fibonacci retracement level is placed.
"Considering that prices have reached a crucial level (near 22,600) and there is a loss of momentum on the hourly time frame, we can expect the Nifty to consolidate over the next few trading sessions," he said. "Keep a stop-loss of 22,400 for the long positions."
According to the weekly options data, the maximum Call open interest was seen at the 23,000 strike, followed by 22,500 and 22,800 strikes, with maximum Call writing at the 23,000 strike, then 22,600 and 22,900 strikes. On the Put side, the maximum open interest was observed at the 22,500 strike, followed by 22,400 and 22,000 strikes, with maximum writing at the 22,500 strike, then 21,800 and 22,200 strikes.
This options data indicates that the hurdle on the higher side for the Nifty remains at 22,600-22,800 levels, with immediate support at 22,400 and then 22,200 levels.
Bank Nifty
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Bank Nifty, however, underperformed the benchmark index Nifty 50, falling 151 points to 48,048 and forming a bullish candlestick pattern with a long upper shadow on the daily charts, indicating selling pressure at higher levels.
But the index failed to surpass the mark of 48,400, where the 20DMA is placed. "A break above this level will lead to a fresh move on the upside. The lower-end support is placed at 48,000, where the highest open interest is built upon the Put side," said Kunal Shah, senior technical & derivative analyst at LKP Securities. He further noted that the index needs to decisively break these levels on either side to have trending moves in the near term.
Meanwhile, the India VIX, the fear index, climbed over 21 levels, making the bulls more cautious. The VIX rose sharply by 6.26 percent to 21.81, the highest closing level since September 28, 2022, up from 20.53 levels.
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