The Nifty 50 failed in a struggle to hold 22,500 mark and has seen profit booking after recent upward journey on March 11. Weak global cues amid uncertainty over US Fed's rate cuts and caution ahead of US and India inflation numbers seem to have weighed on the sentiment.
Monday's downward move is on expected lines given the recent sharp uptrend, but overall the trend is still in favour of bulls considering the continuity in higher highs, higher lows formation, experts said, adding the Nifty 50 may remain in a consolidation mode in coming sessions with support at 22,200, then 22,170 levels (which coincides with 21-day EMA - exponential moving average), and resistance at 22,400-22,500 levels.
The Nifty 50 remained under pressure after hitting an intraday high of 22,527 in opening trade and hit an intraday low of 22,307. The index closed 161 points down at 22,333 and formed bearish candlestick pattern on the daily charts.
"Nifty has been fluctuating within an ascending channel, displaying a pattern of higher highs and higher lows. The overall trend continues to be bullish, although there is currently an intermediate corrective phase in progress," said Rupak De, senior technical analyst at LKP Securities.
In the short term, he feels Nifty could experience weakness, possibly leading to a decline towards the range of 22,200-22,250. Looking at the upside, immediate resistance is identified at 22,400 based on closing prices, he said.
The daily Bollinger bands are contracting indicating a range contraction. This is likely to result in a rangebound price action going ahead, said Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas.
The weekly options data suggests that the 22,300-22,000 is expected to be key support area, with resistance at 22,500-22,600 levels.
On the Call side, the maximum open interest was seen at 22,500 strike, followed by 23,000 & 22,600 levels, with writing at 23,000 strike, then 22,500 & 22,400 strikes, while on the Put side, the 22,400 strike owned the maximum open interest, followed by 21,500 & 22,300 strikes, with writing at 21,800 strike, then 21,300 strike.
Bank Nifty
The Bank Nifty extended downtrend for yet another session, falling 1 percent, or 508 points, to 47,328 and formed bearish candlestick pattern on the daily timeframe. The index settled on the verge of earlier downward sloping resistance trendline as the decisive breaking of the same can drag the index up to 46,900-46,800, the next week support area, which coincides with 21-day EMA and 20-day DMA.
"Bank Nifty filled the gap created on the January 17 and thereafter has been unable to carry on the positive momentum. On the downside, it can slip towards the 46,900 – 46,800 where support in the form of 50 percent Fibonacci retracement level of the rise from 45,662 – 48,161 and the 20-day moving average (46,818) is placed," said Jatin Gedia.
The broader markets reversed previous day's gains as the Nifty Midcap 100 and Smallcap 100 indices declined 0.4 percent and 2 percent respectively, while the India VIX, the fear gauge, rebounded 2.8 percent to 14 level after consistent downtrend in previous seven consecutive sessions.
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