Technical View: Nifty may see more consolidation as long as it trades below 24,500, VIX climbs further to 19

Nifty Consolidates

The Nifty 50 remained in a consolidative phase, trading within last Friday's range before closing lower, as it faced pressure at higher levels amid a gradually increasing India VIX, which reached the 19 mark on May 6. Experts expect the consolidation to sustain in the upcoming sessions as long as the index trades below 24,500, with immediate support seen at 24,200, followed by 24,000, which is considered a crucial support level.

The index traded within a narrow range of 24,350–24,400 for most of the session before closing at 24,380, down 82 points. It formed a bearish candlestick pattern on the daily charts; however, the overall trend remains in favour of the bulls, as the index continues to trade well above all key moving averages (20-, 50-, and 200-day EMAs), all of which are trending upward.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, is of the view that as long as the market remains below 24,500, the weak sentiment is likely to persist. “On the lower side, the market could retest the level of 24,250. Further downside may also continue, potentially dragging the index down to 24,175,” he said.

On the flip side, according to him, a decisive move above 24,500 could push the market higher toward 24,580–24,625. Given the current non-directional market texture, he advised that a levels-based trading strategy would be ideal for day traders.

Weekly derivative data suggests that the Nifty may trade within the range of 24,000–24,500 in the short term. A decisive breakout on either side of this range could provide clear direction to the market.

In the derivatives segment, maximum Call open interest was observed at the 24,500 strike, followed by the 24,400 and 25,000 strikes. The maximum Call writing was seen at the 24,400 strike, followed by 24,500 and 24,450. On the Put side, the 24,000 strike held the maximum open interest, followed by 24,400 and 24,300 strikes. The maximum Put writing was noted at the 24,400 strike, followed by 23,500 and 24,300.

Bank Nifty

The Bank Nifty declined by 1.2 percent or 648 points, closing at 54,271, and once again approached the 23.6% Fibonacci retracement level at 54,116, calculated from the sharp rally between the March low and April high. It touched an intraday low of 54,173 and formed a long bearish candlestick pattern on the daily timeframe.

“Given the wide-range bearish candle and significant selling volume, further downside appears likely. A breach of 54,176 would confirm continued weakness, potentially taking the index toward the quarterly VWAP (volume-weighted average price) near 53,500,” said Anshul Jain, Head of Research at Lakshmishree Investments.

Meanwhile, the fear index, India VIX, continued its upward trajectory amid rising geopolitical tensions between India and Pakistan. It rose by 3.59 percent, reaching the 19 mark, the highest closing level since April 11, indicating rising caution among market participants and signaling a risk-off sentiment for bulls.