The Nifty 50 bounced back after a three-day correction, rising more than half a percent on July 29. The index could not break the 100-day EMA (24,580), though it inched closer to the same, which means 24,600–24,550 can be a support zone in the upcoming sessions. Despite Tuesday's rally, it is still below the medium-term moving average (placed around 24,950). The index needs to reclaim and sustain above it for a further upward journey toward 25,250, which can negate the lower high–lower low formation, according to experts.
The Nifty 50 opened lower at 24,610 and hit a day's low of 24,599 amid volatility. The index gained strength in the afternoon and climbed up to 24,847 in late trade, before closing at 24,821, up 140 points (0.57 percent), and forming a bullish candle on the daily charts with above-average volumes.
The MACD histogram is also showing signs of waning negative momentum, while the RSI was back above the 40 zone at 42.05.
"On the 2-hourly chart, the index has started a recovery supported by a positive divergence. In addition, a hidden positive divergence is visible on the daily chart, further indicating the potential for a smart recovery in the short term," Rupak De, Senior Technical Analyst at LKP Securities, said.
On the higher side, according to him, the Nifty may move towards 24,950–25,000. "A decisive move above 25,000 could trigger a rally towards 25,200," he said.
The monthly options data indicated that the Nifty may face resistance at 25,000 in the near term, with support at 24,700.
On the Call side, the maximum open interest was placed at the 25,000 strike, followed by the 25,500 and 25,200 strikes, with the maximum Call writing at the 25,150 strike, followed by the 24,550 strike. There was significant Call unwinding at the 24,800 strike.
On the Put side, the 24,800 strike holds the maximum open interest, followed by the 24,700 and 24,500 strikes, with the maximum writing at the 24,800 strike, and then the 24,700 and 24,650 strikes. Major Put unwinding was seen at the 25,100 and 25,200 strikes.
Bank Nifty
The Bank Nifty also rebounded with a 137-point gain to finish at 56,222 after taking support at the 55,800 zone but underperformed the benchmark Nifty 50. The index formed a green candle on the daily timeframe and closed above the 50-day EMA, which is a positive sign.
Going ahead, "the support zone of 55,800–55,700 will be crucial to watch. Holding above this band is essential to maintain the current short-term positive bias," Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, said.
On the flip side, he feels the resistance zone of 56,500–56,600 is expected to pose a significant challenge. A decisive and sustainable breakout above the 56,600 level could pave the way for an extended pullback rally, with immediate upside targets at 57,000 followed by 57,500 in the near term, he said.
The fall in India VIX, the fear index, also supported the bullish sentiment. It was down 4.46 percent to 11.53, after rising in the previous three straight sessions.
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