Technical View: Bears likely to tighten grip if Nifty breaks 22,000, Bank Nifty goes below January low

Nifty Rangebound

The Nifty 50 erased its opening gains and remained rangebound for the majority of the session before closing flat with a negative bias on March 3. The sentiment remains in favour of the bears, as every rebound is expected to face pressure from them, according to experts. The index reached a crucial level of 22,000 (which coincides with the 100-day EMA), and a decisive close below this level could open the door for a further decline to 21,800. However, the 22,300 level is expected to act as a hurdle on the higher side.

As expected, the Nifty 50 opened higher at 22,195 and bounced back up to 22,262 in early trade but could not sustain those levels for long. The index corrected down to 22,005 in late morning trading, but showed more than a 100-point recovery from the day’s low later, finishing at 22,119, down by 5.4 points.

The index formed a bearish candlestick pattern with upper and lower shadows on the daily charts. Technically, this market action indicates volatile movement with a minor upside recovery attempt from near the 22,000 mark.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, although the Nifty showed a minor upside recovery from the lows, the underlying trend remains negative.

"Any upside bounces from here could encounter resistance around the 22,300 levels. A decisive move above 22,500 levels could confirm a short-term bottom reversal in the Nifty," he said, adding that any further fall below 22,000 levels could find support around the 21,800-21,700 band.

The weekly options data suggested that the Nifty is expected to be in the range of 21,800-22,500 in the short term.

On the Call side, the maximum open interest was seen at the 23,000 strike, followed by the 22,500 and 22,400 strikes, with the maximum Call writing at the 22,400 strike, followed by the 23,100 and 23,000 strikes. On the Put front, the 22,000 strike holds the maximum open interest, followed by the 21,900, 21,500, and 21,800 strikes, with the maximum Put writing at the 21,900 strike, followed by the 22,000 and 22,100 strikes.

Bank Nifty

The Bank Nifty also saw selling pressure, underperforming the benchmark Nifty 50. The index fell below its January low and hit a new low for the current year at 47,841.30. It showed a 273-point recovery from the day’s low before closing at 48,114, down 230 points, and formed a bearish candlestick pattern with a lower shadow on the daily timeframe with above-average volumes.

Notably, "The Bank Nifty took support at the lower Bollinger Band on the daily chart, signaling oversold conditions. These technical factors indicate a possible short-term recovery or relief rally in the coming sessions," Jigar Patel, Senior Manager - Equity Research at Anand Rathi, said.

As for the technical levels, he sees immediate resistance at 48,600, with 47,800 acting as a crucial support zone.

The India VIX, the fear factor, fell by 1.06 percent to 13.76 levels, sustaining below the 14 zone, which is generally a comfort zone for bulls.