The Nifty 50 extended its downward move for the second consecutive session and broke below the 200-day SMA (simple moving average), correcting more than 200 points on April 25. This marks a weak start to the May series. However, the overall trend still remains positive.
The Shooting Star pattern on both the Nifty 50 and Bank Nifty weekly charts, a bearish reversal pattern, coupled with a rising VIX, signals caution ahead. The trade in the following session will give confirmation about this trend reversal pattern.
Until then, the 23,800-23,700 zone is expected to act as a key support level. If the index decisively breaks below this, the selling pressure may push the index further down to 23,400 (200-day EMA). On the upside, the hurdle is seen at the 24,300-24,500 zone, according to experts.
The Nifty 50 opened higher at 24,289 and climbed to 24,365, which was in line with expectations, but failed to sustain those gains for long. The index lost momentum and finished at 24,039, down 207 points (0.86%), forming a bearish candlestick pattern with a lower shadow on the daily charts, indicating weakness, though there was some buying interest at lower levels.
For the week, the index gained 0.8% and formed a Shooting Star pattern on the weekly timeframe, indicating temporary weakness. Hence, Amol Athawale, VP-Technical Research at Kotak Securities, believes that as long as the market remains below 24,100, the correction wave is likely to continue.
On the downside, the market could slip to 23,800, and further downside could drag the index down to 23,700, he added. Conversely, a break above 24,100 could change the market sentiment. If the market surpasses this level, a rally toward 24,400-24,500 could follow, according to him.
The weekly options data suggests that the Nifty may trade in the range of 23,500-24,500 levels in the short term. The maximum Call open interest is seen at the 25,000 strike, followed by the 24,500 and 24,300 strikes, with the maximum Call writing at the 24,500 strike, followed by the 25,000 and 24,300 strikes. On the Put side, the 23,500 strike holds the maximum open interest, followed by the 24,000 and 23,800 strikes, with the maximum writing at the 23,500 strike, followed by the 23,800 and 23,900 strikes.
Bank Nifty
The Bank Nifty saw selling pressure for the third consecutive session, declining 537 points (0.97%) to 54,664. It formed a bearish candlestick pattern with a lower shadow on the daily charts, while a Shooting Star pattern was formed on the weekly scale, signaling caution for bulls. The index was up 0.7% during the week.
According to Anshul Jain, Head of Research at Lakshmishree Investments, Friday's low of 54,176 becomes a critical support level. "A breach and close below 54,175 could trigger a fresh sell-off, with immediate downside potential toward 53,700," he said.
Conversely, a move above 54,175 could pave the way for a fresh all-time high, though this seems unlikely given the weak body close of Friday’s candle, which indicates fading bullish strength, he believes.
Meanwhile, the India VIX, the fear gauge, extended its upward movement for the third consecutive day, climbing above 17, signaling that bulls need to be cautious. It rallied 5.58% to 17.16 levels.
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