Technical View: Nifty may consolidate with support of 23,050 as long as it trades below immediate resistance of 23,350

Nifty Trader

The Nifty 50 extended its upward journey amid choppy trade, closing moderately higher on January 15. The technical indicators continued to indicate that bears have a strong upper hand over Dalal Street, though bulls managed to continue their northward move for the second consecutive session. The index needs to clear the immediate crucial hurdle of 23,350 for further upward movement towards 23,450, followed by 23,700 (near the 200-day EMA). However, until then, consolidation may sustain, with support at 23,050, according to experts.

The Nifty 50 opened higher and hit an intraday high of 23,294. There was some selling pressure in the afternoon, but the index managed to recover those losses and finished at 23,213, up by 37 points, forming a small bearish candlestick pattern with upper and lower shadows on the daily charts. This market action signals choppy movement in the market with a positive bias.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the near-term trend of the Nifty is still weak. "A sustainable move above the hurdle of 23,300-23,350 levels could further strengthen the upside bounce in the market," he said.

However, at the lows, 23,050 is going to be a crucial support for the market, he feels.

On the weekly options front, the maximum call open interest was seen at the 23,300 strike, followed by the 24,000 and 23,200 strikes, with maximum call writing at the 23,300 strike, and then the 23,250 and 23,200 strikes. On the put side, the 23,200 strike holds the maximum open interest, followed by the 23,000 and 22,500 strikes, with maximum put writing at the 23,200 strike, and then the 22,700 and 22,650 strikes.

The derivative data indicated that the Nifty 50 may face immediate resistance at the 23,300 level, while the key support is placed at 23,000.

Bank Nifty

The Bank Nifty also had a volatile session, rising 23 points to 48,752 and forming a small bearish candlestick pattern with long upper and lower shadows, resembling a High Wave-like pattern on the daily charts, indicating indecision among buyers and sellers. The index continued its higher highs-higher lows formation for another session, but the sentiment remains bearish, with the index trading below all moving averages and short-term moving averages crossing long-term moving averages on the downside.

"The banking index is still placed below its 250-day simple moving average (250-DSMA) hurdle, which is around 49,900 levels. On the downside, 47,900 levels will act as immediate support for the index," Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C Mehta Investment Intermediates, said.

As long as the Bank Nifty remains below the 49,900 level, he advised traders to follow a sell-on-rise strategy.

Meanwhile, the volatility index, India VIX, dropped further, down by 1.37 percent to 15.26. Until the VIX drops and sustains below the 14 mark, the bulls may not get into a comfort zone.