The Nifty decisively broke out of a three-day consolidation on April 4 to close above 22,500 for the first time, supported by banks and IT names, a day ahead of the RBI rate decision.
The index opened 157 points higher and hit a new high of 22,619 in the early trade but immediately started drifting lower. It sank to the day's low of 22,304, which can act as a key support going ahead.
The index recovered most of the losses in the last couple of hours to close 80 points higher at 22,515.
It formed a small bearish candlestick with a long lower shadow on the daily chart, indicating strong buying interest at lower levels.
"Still the market is not able to generate enough strength for a decisive upside breakout of 22,550-22,600 levels. A decisive move above 22,550-22,600 levels can open the next upside towards 22800 levels," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
The near-term uptrend remains intact. "We observe smaller degree positive pattern like higher tops and bottoms as per daily timeframe chart. Immediate support is at the 22,300 level," he said.
The options data indicates that the Nifty may face resistance at 22,600-22,700, with support shifting higher to 22,400.
On the weekly options front, the maximum Call open interest was at the 22,700 strike, followed by 22,500 and 23,000 strikes, with meaningful Call writing at the 22,700 strike, then 23,100 and 22,600 strikes.
On the Put side, the 22,500 strike owned the maximum open interest followed by 22,400 and 22,000 strikes, with writing at the 22,500 strike, then 22,400 and 22,300 strikes.
Bank Nifty
Bank Nifty opened gap up and decisively broke out of the downward sloping resistance trendline adjoining highs of December 28, 2023 (record high), and March 6, 2024 (previous swing high), on a closing basis.
The banking index closed above the 48,000 mark for the first time since January 16, rising 437 points or 0.92 percent to 48,061.
It formed a Doji pattern on the daily chart, as the closing was near opening levels, indicating indecision between buyers and sellers.
If the index manages to sustain above the trendline, the record high of 48,636 can't be ruled out in coming sessions, experts said.
"Following a strong resurgence, the Bank Nifty surged past the significant resistance level of 48,000, coinciding with the peak open interest on the Call side. The immediate support for the index has now shifted to 47,500, where the highest open interest is concentrated on the Put side," Kunal Shah, senior technical & derivative analyst at LKP Securities said.
It will be crucial for the index to hold on to 48,000 after the RBI policy announcement for the uptrend to continue towards 49,000/50,000, he said.
The fear gauge India VIX fell for the fourth consecutive session, down 1.34 percent to 11.22 level, the lowest since November 15.
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