Technical View: Relief rally lifts Nifty near 25,300; bears still dominant as VIX stays high, Bank Nifty holds trendline support for another session

Nifty outlook for January 23

• Monthly options data suggests the 25,000-26,000 range for Nifty 50 in short term
• Experts feel the relief rally unstainable given VIX at elevated levels
• Nifty may face an immediate hurdle at 25,500–25,600
• Immediate support seen at 200-day EMA, followed by 24,900

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The Nifty 50 witnessed a relief rally after a three-day losing streak, bouncing back above the 200 DEMA (25,164) and closing near 25,300 with gains of half a percent on January 22. However, experts raised doubts over the sustainability of this uptrend given the prevailing strong bearish sentiment. The India VIX, the fear index, remained at elevated levels, though it declined 3.12 percent to 13.35 after a five-day uptrend, signalling caution for bulls.

The index may face an immediate hurdle at 25,500–25,600, while immediate support is placed at the 200-day EMA, followed by 24,900 as a crucial support level, experts said.

The Nifty 50 opened above 25,300 and climbed to 25,436 in the morning but could not sustain these levels, although it maintained a positive bias throughout the session. The index turned range-bound after the initial hour of the rally and closed at 25,290, up 132 points (0.53 percent), with above-average volumes. It formed a small red candle with upper and lower shadows, resembling a high-wave kind of candlestick pattern on the daily timeframe, indicating volatility and indecision among market participants.

The formation of high-wave type candles in the last two sessions signals heightened volatility in the market. The index continues to remain well below the 20-, 50- and 100-day EMAs, with the 20- and 50-day EMAs trending downward. Meanwhile, the RSI inched higher to 33.82 but remained below the signal line. The MACD also maintained a bearish crossover, with weakness fading slightly in the histogram. The Stochastic RSI showed a bullish crossover in the oversold zone. All this indicates a short-term pullback within a broader weak trend.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the overall near-term trend of the market remains weak, but a short-term bounce is unfolding.

“A sustainable up move above 25,500 could confirm a near-term bottom reversal pattern for the Nifty. On the other side, any weakness from here could drag the Nifty down to the recent swing lows of around 24,900–25,000 levels in the near term,” he said.

The monthly options data suggested that the Nifty 50 is expected to trade in a broader range of 25,000–26,000 levels.

The maximum Call open interest was placed at the 26,000 strike, followed by the 25,500 and 25,800 strikes. The maximum Call writing was seen at the 25,400, 25,800 and 25,600 strikes. Meanwhile, the 25,000 strike held the maximum Put open interest, followed by the 25,200 and 25,300 strikes, with maximum Put writing at the 25,300, 25,200 and 25,000 strikes.

Bank Nifty

The Bank Nifty also rebounded 400 points (0.68 percent) to 59,200 and formed a doji candlestick pattern on the daily charts—indicating indecision among bulls and bears—after bearish candle formations and a correction in the previous three sessions. The index attempted to claw back above short-term moving averages and fell below the 50-day EMA intraday but finished between them.

The momentum indicators remained in sell mode, with the MACD sustaining below the signal line and showing further weakness in the histogram. The RSI rose to 47 but remained below the reference line. All this indicates continued cautious sentiment.

On the hourly chart, the RSI has entered a bullish crossover, indicating short-term recovery attempts. However, the current setup suggests elevated volatility, and the bounce should be treated as a technical pullback rather than a trend reversal after the previous decline, said Vatsal Bhuva, Technical Analyst at LKP Securities.

According to him, a sustainable bullish view should be considered only if the index reclaims its 20-day SMA and 59,800 on a closing basis. Until then, Bank Nifty is expected to trade in a range of 58,700–59,500.