Technical View: Bears may take control if Nifty decisively breaks 24,450 support; 54,550 key level for Bank Nifty

Nifty Downtrend

The Nifty 50 wiped out the previous day’s gains and closed 0.8 percent lower on May 22, marking a decline in four of the last five sessions since hitting the recent swing high of 25,116. Despite the fall, the index managed to defend both the 20-day EMA (24,470) and the midline of the Bollinger Bands (24,524) on a closing basis. However, it finished below the 10-day EMA (24,692), with above-average volumes.

While the index continues to hold key moving averages — the 20-day, 50-day, and 200-day EMAs — the prevailing uptrend could reverse if the index decisively breaks below the 24,450 level, experts warn. On the upside, a pullback may be seen above the 24,750–24,800 zone, beyond which 25,000 remains the next key level to watch.

The Nifty 50 opened lower at 24,734 and remained under pressure throughout the session, hitting an intraday low of 24,462. It trimmed some losses during the final hour of trade and closed at 24,610, down 204 points. The index formed a bearish candle with a lower shadow on the daily chart, indicating buying interest at lower levels and raising the possibility of a short-term pullback.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, more evidence of upside is needed to confirm a higher bottom reversal pattern in the market.

He noted that support, as per the change in polarity principle, is placed around the 24,500–24,450 zone. “A sustainable upmove above the crucial hurdle of 24,800–24,900 levels is likely to confirm the end of the short-term downward correction, potentially triggering an upside bounce in the market. Immediate support is at 24,450,” he said.

Options Data Analysis

Weekly options data suggest that Nifty may trade in the 24,000–25,500 range in the near term. The maximum Call open interest is at the 25,000 strike, followed by the 25,500 and 24,800 strikes. The most significant Call writing was observed at the 24,600 strike, followed by 25,400 and 25,500 strikes. On the Put side, the 24,000 strike holds the maximum open interest, followed by 24,500 and 24,600 strikes, with the highest Put writing at the 24,600 level, then 24,000 and 23,900.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, commented that the intraday market texture remains weak, and a fresh selloff could occur only if the index breaks below the 24,450 level.

Bank Nifty holds key support, ends off day's low

The Bank Nifty trimmed losses from an intraday low of 54,577 and ended 134 points lower at 54,941. It formed a small bullish candle with a long lower shadow on the daily timeframe, indicating healthy buying interest at lower levels. The index also defended both the midline of the Bollinger Bands (54,940) and the 20-day EMA (54,607).

“For a sustained bounce, the index must hold above 55,100; only then can bulls aim for 55,500,” said Anshul Jain, Head of Research at Lakshmishree Investments. “Until then, the structure remains weak, and the swing low of 54,442.3 remains the logical target for bears.”

India VIX cools slightly, but remains elevated

Meanwhile, the India VIX — the market’s fear gauge — declined after a three-day uptrend but remained at elevated levels. It fell by 1.65 percent to 17.26, suggesting that bulls should remain cautious amid ongoing volatility.