Technical View: Bullish trend sustains, Nifty may target 25,250 despite consistent Bank Nifty underperformance

Nifty Outlook for August 22

The Nifty 50 maintained its upward move for the sixth consecutive session, despite profit booking at higher levels, closing the session with moderate gains and holding firmly above the 25,000 mark for another session on August 21, the weekly F&O expiry day. The index made a strong attempt to reach the 61.8 percent Fibonacci retracement target of 25,160, but failed to sustain.

Overall, the trend remains positive, with the index trading well above the 50 percent retracement level (25,000 – from June high to August low) and holding above all key moving averages. The 10- and 20-day EMAs continue to trend upward, while the 50-day EMA has been gradually rising. Furthermore, the MACD moved closer to the zero line with a bullish crossover, and the histogram gained further strength, while the RSI climbed to 57.88, signaling a positive trend.

Hence, according to experts, as long as the Nifty 50 holds 25,000 as immediate support, the rally toward 25,160, followed by 25,250, and then 25,350–25,400 is possible in the upcoming sessions. The 24,850 level is expected to act as a key support, below which selling pressure cannot be ruled out.

The Nifty 50 opened higher at 25,142 and climbed near 25,150 twice amid volatility but could not sustain the gains due to profit booking. The index closed off the day's high at 25,084, up 33 points, and formed a bearish candle, but continued the higher highs–higher lows formation on the daily charts.

Technically, today's market action indicates a lack of strength for a decisive upside breakout. This could be considered a short-term breather in the market amid the ongoing uptrend.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the overall uptrend in Nifty remains intact, but short-term consolidation or minor weakness cannot be ruled out in the next 1–2 sessions, before it surges higher toward the next hurdle of 25,300. Immediate support is placed at 25,000, he said.

The monthly options data indicated that the Nifty may face resistance at 25,200 in the upcoming sessions, with 25,000 as immediate support.

The maximum Call open interest was placed at the 25,500 strike, followed by the 25,000 and 25,200 strikes, with the maximum Call writing at the 25,600 strike, followed by the 25,500 and 25,100 strikes. Meanwhile, the 25,000 strike holds the maximum Put open interest, followed by the 24,500 and 24,800 strikes, with the maximum Put writing at the 25,100 strike, followed by the 25,000 and 24,800 strikes.

Bank Nifty

The Bank Nifty attempted to breach the psychological 56,000 mark, touching a day’s high of 55,994, but witnessed profit booking at higher levels, closing with just 57 points gain at 55,755, and forming a bearish candle on the daily timeframe. The index could not sustain above the 20- and 50-day EMAs but managed to hold above the midline of the Bollinger Bands.

Overall, it remained in a consolidation phase for the third consecutive session and needs to surpass Monday’s high of 56,156 for further upward movement.

According to Chandan Taparia, Head – Technical Research and Derivatives at Motilal Oswal Financial Services, “Bank Nifty has to hold above the 55,555 zone for an up move toward 56,000, then 56,250 levels, while on the downside, support is seen at 55,555, then 55,250 zones.”

Meanwhile, the India VIX, the fear gauge, remained supportive for bulls as it corrected further by 3.5 percent to 11.37, indicating stability and a less uncertain environment for the market going ahead.

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