Technical View: Nifty sees relief rally, but strong follow-through buying needed for move toward 25,200; Bank Nifty rebounds above 59,000 as VIX cools 16%

Nifty outlook for March 6

• Nifty sees relief rally and records 1.17% gains
• Strong follow-through buying needed for move toward 25,200
• Bank Nifty rebounds above 59,000 as VIX cools 16%

Did our AI summary help?

The Nifty 50 snapped a three-day losing streak and negated the lower top–bottom structure of the previous four straight sessions on March 5, rising more than 1 percent. It outperformed the banking index and recorded above-average volume amid hopes of de-escalation in the ongoing tensions between the US-Israel and Iran.

Experts said that follow-through buying and a decisive move above 25,200 are necessary for the bulls to gain enough strength. Until then, the market may witness consolidation, with 24,600–24,500 acting as support.

The benchmark index opened higher above 24,600 and consolidated between 24,500 and 24,675 before gaining further strength in the last hour of trade. It rallied 285 points (1.17 percent) to close at 24,766 and formed a long bullish candle with upper and lower shadows on the daily timeframe, signalling strength despite intraday volatility.

The daily RSI, which had dipped to 30.37 in the previous session, saw a mild recovery and rose to 37.55, indicating a short-term bounce from oversold levels. The MACD remained below the signal line with another long bearish bar in the histogram, while the Stochastic RSI turned bullish near the oversold zone. All this indicates a potential short-term pullback, though the broader trend remains cautious.

The index has retraced 23.6 percent of the entire recent decline, which is placed near the 24,800 level. However, the market is not completely out of the woods yet, and the current move should be considered only a pullback as long as the Nifty trades below the 25,200 level, said Nilesh Jain, VP and Head of Technical and Derivative Research at Centrum Finverse.

On the downside, according to him, immediate support is placed at 24,600, and a break below this level could drag the index further towards 24,400.

Meanwhile, the fear gauge India VIX fell sharply after a three-day spike, declining 15.53 percent to 17.86, signalling some comfort for bulls. However, a further decline and consistent movement below the 12 zone are necessary for major stability for bulls.

The weekly options data suggested that the Nifty is expected to take support at 24,500 and face resistance at 25,000 in the short term, as a decisive and sustainable move on either side could confirm the trend for the Nifty 50.

The maximum Call open interest was placed at the 25,500 strike, followed by the 25,000, 25,300, and 24,800 strikes, with the maximum Call writing at the 25,500, 24,800, and 25,300 strikes.

On the Put side, the 24,500 strike holds the maximum Put open interest, followed by the 24,600 and 24,300 strikes, with the maximum Put writing at the 24,600, 24,500, and 24,700 strikes.

Bank Nifty

The Bank Nifty also managed to stay well above the previous day’s low and negated the lower highs–lower lows structure of the previous four consecutive sessions, but the volume was lower than the previous day.

After losing more than 2,400 points in the past three days, the index gained 301 points (0.51 percent) to close at 59,056, which is almost near the 100-day EMA (59,050). However, it underperformed the benchmark Nifty 50 and remains well below its short- and medium-term moving averages.

The Bank Nifty formed a Doji-type candlestick pattern on the daily charts, indicating indecision among bulls and bears and a lack of clear directional conviction among market participants at current levels.

Going forward, sustaining above the 100-day EMA is crucial for a move towards 59,500. Until then, consolidation may continue with 58,500 acting as support.

The RSI rose to 39.36 after moving close to the oversold zone but remains well below the signal line, while the MACD dropped below the zero line with further expansion in the red histogram.

The Stochastic RSI is on the verge of a bullish crossover in the oversold zone but requires confirmation in the coming sessions. There was also an expansion in the Bollinger Bands, indicating the possibility of increased volatility ahead.

“The zone of 59,400–59,500 will act as a key resistance area in the coming sessions. A sustained move above this band could open the door for a meaningful upside extension,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.

On the downside, according to him, the 58,600–58,500 region will serve as a crucial support zone. A decisive break below this level may trigger renewed selling pressure and generate a stronger trending move.