Technical View: Sustainable close above 22,600 can bring bullish momentum in Nifty

Nifty Uptrend

The Nifty 50 rebounded half a percent, making a good start to the week on March 17 after a correction in the previous week. The index managed to close above the 5 and 10-day EMAs but could not sustain above the midline of the Bollinger Bands (22,560), which is close to the 20-day EMA (Exponential Moving Average at 22,600). Overall, it remained in the range of 22,300-22,700 for a week now. According to experts, as long as the index holds above 22,300, an upward rally toward 22,600-22,700 is possible, followed by 23,000.

The Nifty 50 opened lower at 22,353 (which was also its intraday low) and immediately rebounded to hit a day's high of 22,577. The index erased some gains and remained in the range of 22,450-22,530 for the rest of the session. It finished at 22,509, up 112 points, and formed a bullish candlestick pattern with a minor wick on the daily charts, indicating positivity.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, is of the view that as long as the market is trading above 22,350, the bullish sentiment is likely to continue. On the higher side, 22,600 would be the immediate resistance zone for the bulls, he said.

According to him, following a breakout above 22,600, the market could move toward 22,675-22,700. On the flip side, if the market falls below 22,350, the sentiment could change. Below this level, traders may prefer to exit their long positions, he advised.

The weekly options data suggested that the Nifty may trade in the range of 22,300-23,000 in the short term.

On the Call side, the maximum Call open interest was seen at the 23,500 strike, followed by the 23,000, 22,800, and 22,700 strikes, with the maximum writing at the 22,800 strike, followed by the 22,850 and 23,000 strikes. On the Put front, the 22,500 strike holds the maximum Put open interest, followed by the 22,000 and 22,300 strikes, with the maximum writing at the 22,500 strike, and then the 22,300 and 22,200 strikes.

Bank Nifty

The Bank Nifty outperformed the benchmark Nifty 50, rising 294 points (0.61 percent) to 48,354 and forming a bullish candlestick pattern with some upper shadow on the daily timeframe, indicating a positive bias, though there was selling pressure at higher levels.

"Now, the banking index has to hold above the 48,250 zone for a bounce towards 48,500, then 48,750 levels, while on the downside, support is seen at the 48,250 and 48,000 zones," Chandan Taparia, Senior Vice President | Head of Technical Research and Derivatives at Motilal Oswal Financial Services, said.

Meanwhile, the India VIX, the volatility index, sustained below all key moving averages, which is positive for the bulls, though it increased 1 percent to finish at 13.42 levels.