Technical View: Selling pressure may intensify only if Nifty decisively breaks 24,500, VIX at 8-week low

NIfty Trend

The Nifty 50 closed lower on profit booking at higher levels on December 12 but remained volatile and traded in a range for the fifth consecutive session due to the lack of triggers on both the global and domestic fronts. The index is still within the range of 24,500–24,700. If the index breaks 24,500 on the downside, 24,350 is the immediate level to watch, followed by 24,200. On the higher side, above 24,700, the index can march towards the 24,900–25,000 zone, experts said.

The Nifty 50 traded lower for most of the session and fell by 93 points to 24,549, forming a bearish candlestick pattern with an upper shadow on the daily charts, indicating selling pressure at higher levels. However, the index still stayed above all key moving averages, with the 20-day EMA (Exponential Moving Average) crossing above the 100-day EMA.

According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, the intraday market texture is weak, but a fresh sell-off is possible only after a dismissal of the 24,500 level. Below that, the market could slip to 24,350–24,300. On the other hand, Chouhan added that above 24,620, the sentiment could change, and the market could bounce back to 24,700. Further upside may follow, potentially lifting the index to 24,775.

According to weekly options data, the maximum call open interest was seen at the 25,500 strike, followed by the 25,000 and 24,600 strikes, with maximum call writing at the 25,500 strike and then the 24,600 and 25,000 strikes. On the put side, the 24,000 strike holds the maximum open interest, followed by the 24,600 and 24,500 strikes, with maximum writing at the 24,600 strike, and then the 23,900 and 24,500 strikes.

The above options data indicate that 24,500 is expected to be an immediate support, followed by 24,000 as a crucial support. On the higher side, resistance is seen at 24,600, followed by 25,000. Overall, the index is likely to trade within the range of 24,000–25,000.

Bank Nifty

The Bank Nifty climbed above the 53,500 level after opening lower but could not sustain those gains for long and remained under pressure for most of the session. The banking index declined by 175 points to 53,216 and formed a small-bodied bullish candlestick with a long upper shadow, resembling a Gravestone Doji pattern (though not a classical one) on the daily charts. This pattern suggests a potential trend reversal, but participants need to wait for strong confirmation in the following session.

Chandan Taparia, Senior Vice President and Head of Technical Research and Derivatives at Motilal Oswal Financial Services, stated, "The Bank Nifty must hold the 53,000 zone for a bounce towards 53,650 and then 54,000 levels. However, a failure to hold above 53,000 could lead to weakness, with support at 52,800 and 52,500 levels."

Meanwhile, the volatility continued its downward move for the fifth consecutive session and reached an eight-week low, which is favourable for bulls. The India VIX declined by 0.58 percent to 13.19, its lowest closing level since October 18.

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