Technical View: Profit booking spoils follow-up buying attempt, bears to charge if Nifty breaks 24,400 support; Bank Nifty tests 200 DEMA

Nifty outlook for September 03

The Nifty 50 saw healthy follow-up buying interest and managed to surpass the 20-day and 100-day EMAs as well as the midline of the Bollinger Bands in a single session. However, profit booking in the latter part of the day erased those gains, with the index losing 176 points from the day's high and closing 0.2 percent lower on September 2 — the first revised weekly F&O expiry day.

Going forward, 24,500 is expected to act as immediate support for the Nifty 50, followed by 24,400 (a level that coincides with the previous week’s low and an upward-sloping trendline), while 24,300 remains a crucial support. On the upside, the 24,700–24,800 zone is likely to act as a key hurdle for any move toward 25,000, according to experts.

The Nifty 50 opened higher at 24,653, climbed to an intraday high of 24,756, but witnessed profit booking thereafter. The index ended the session at 24,580, down 45 points, forming a bearish candle with a long upper shadow and a minor lower shadow on the daily charts — indicating selling pressure emerging near the immediate resistance of 24,700.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the short-term uptrend in Nifty remains intact, and the important lower supports of 24,300–24,200 are expected to be protected amid short-term volatility.

"Any dips down to the said supports are expected to be a buying opportunity for the next 1–2 sessions. However, a decisive upmove above the key resistance of 24,750 is likely to trigger more short covering in the near term," he said.

Weekly options data suggests that the 24,700–24,800 zone is expected to act as key resistance, with immediate support at 24,500 for the Nifty 50.

Maximum Call Open Interest was placed at the 25,000 strike, followed by the 24,800 and 24,700 strikes. Maximum Call writing was seen at the same levels.

On the Put side, the 24,500 strike held the maximum Put Open Interest, followed by the 24,000 and 24,600 strikes. Maximum Put writing was observed at the 24,500 strike, followed by 24,600 and 24,800.

Bank Nifty

The Bank Nifty also attempted a rally and climbed up to 54,161, but selling pressure resumed from late morning trade. The index underperformed the benchmark Nifty 50, correcting 341 points (0.63%) to finish at 53,661. It formed a long bearish candle that nearly engulfed the previous day’s green candle, signaling prevailing negative sentiment.

During the fall, the Bank Nifty tested its 200-day EMA (53,578) before showing a mild recovery. Momentum indicators also painted a cautious picture — the RSI on the daily chart remains in bearish territory and continues to trend downward, indicating weakening strength and a lack of buying interest.

"The zone of 53,400–53,300 will act as crucial support for the index. Any sustainable move below 53,300 will likely lead to a sharp correction down to 52,800, followed by 52,400 in the short term. On the upside, the zone of 54,000–54,100 will act as an immediate hurdle," said Sudeep Shah, Head – Technical Research and Derivatives at SBI Securities.

Meanwhile, the India VIX, the volatility index, remained in the lower zone but rose 0.95 percent to 11.4. Such complacency indicates a warning for market participants, as it suggests the potential for a sharp move in either direction, despite currently contributing to market stability.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.