Technical View: Nifty needs to hold 24,500 to rally towards 25,000-25,250, Bank Nifty support lies at 53,500

Technical View: Nifty needs to hold 24,500 to rally towards 25,000-25,250, Bank Nifty support lies at 53,500

Equity benchmarks Sensex and Nifty closed higher on September 1 following three straight sessions of losses, as higher monthly sales lifted automobile stocks while better-than-expected Q1 economic growth data boosted overall sentiment.

The Nifty 50 rose 0.81% to 24,625.05 and the BSE Sensex added 0.70% to 80,364.49. Both the benchmark indices had fallen around 2.2% in the last three sessions.

Auto stocks soared 2.8% and the index was the top sectoral gainer. The top five Nifty gainers were also auto companies. Bajaj Auto rose 3.9% and topped the charts, while TVS Motor Company hit a record high.

However, Rupak De, Senior Technical Analyst at LKP Securities, said sentiment remains “sell on rise” as long as Nifty stays below 24,850.

"The index has witnessed a significant recovery from negativity as the Nifty reversed momentum following an inverted hammer pattern. On the hourly RSI, a hidden positive divergence is visible. However, sentiment remains “sell on rise” as long as the index stays below 24,850. Only a decisive move beyond 24,850 might induce a rally towards 25,250/25,500. On the lower end, support is placed at 24,500," said Rupak De.

Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities, said Nifty could test the 24,200 level if it goes below 24,470.

"Going ahead, the zone of 24,710-24,740 will act as an important hurdle for the index. Any sustainable move above the level of 24,740 will lead to extension of the pullback rally up to the 24,900 level. While on the downside, the zone of 24,500-24,470 will act as immediate support for the index. Any sustainable move below the level of 24,470 will lead to resume its southward journey. In that case, it is likely to test the 24,200 level," said Shah.

Regarding Bank Nifty, Shah said the zone of 53,600-53,500 will act as important support for the index

"After a five-session losing streak, the Bank Nifty index staged a recovery on Monday, closing above the 54000 mark with a gain of 0.65%. The rebound signals a short-term relief rally, supported by selective buying in banking heavyweights.

"Despite the positive close, Bank Nifty continues to underperform the frontline indices, indicating that investor sentiment towards the banking space remains cautious. The index is yet to reclaim key technical levels.

"Going ahead, the zone of 54,300-54,400 will act as a crucial hurdle for the index. Any sustainable move above the level of 54,400 will lead to extension of the pullback rally up to the 54,900 level. While, on the downside, the zone of 53,600-53,500 will act as important support for the index, as the 200-day EMA is placed in that region," added Shah.

"A long bull candle was formed on the daily chart that formed near the cluster support of 24300 levels. Technically, this market action indicates a formation of short-term bottom reversal pattern. A sustainable move above the hurdle of 24700 levels could open more upside in the coming sessions.

"The short-term trend of Nifty seems to have reversed up post down trend. A decisive follow-through upmove above 24,700 is likely to pull Nifty towards the next 25,000 levels. Any failure to sustain the highs could drag Nifty down to the key supports of around 24,300-24,200 levels in the near term," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Shrikant Chouhan, Head Equity Research, Kotak Securities said on intraday charts, market formed a reversal pattern.

"Today, the benchmark indices bounced back sharply, with the Nifty ending 198 points higher and the Sensex up by 555 points. Among sectors, almost all the major sectoral indices traded in positive territory, but the Capital Market and Auto indices outperformed, Capital Market 3.30 , Auto up by 2.75 percent. Technically, after a muted open, the market maintained positive momentum throughout the day. On intraday charts, it formed a reversal pattern, and on daily charts, it created a bullish candle, indicating a continuation of the pullback formation in the near future.

"For traders now, as long as the market trades above 24,500/80,000, the pullback formation is likely to continue. On the higher side, it could bounce back to the 20-day SMA (Simple Moving Average) or 24,700/80,500. Further upside may also continue, potentially lifting the market up to 24,800/80,800. On the flip side, if the market falls below 24,500/80,000, traders may prefer to exit their long positions," said Chouhan.