Technical View: VIX above 14 signals caution for bulls, crossing 25,700 crucial for further Nifty upside; Bank Nifty stays firm above key moving averages

Nifty Outlook for February 23

• India VIX surges above 14 zone, Momentum indicators signal weakness
• Nifty 50 needs to surpass and sustain above 25,650–25,700 zone for further uptrend
• 25,400 expected to remain a key support for Nifty 50
• Bank Nifty climbs back above 61,000

Did our AI summary help?

The Nifty 50 rebounded after a day of steep fall, rising nearly half a percent, with 25,400 acting as a key support on a closing basis on February 20. While the absence of follow-through selling is encouraging, the market signals are not convincing enough to conclude stability. The VIX surged above the 14 zone, momentum indicators gave weak signals, and the Nifty 50 continued to trade below all key moving averages except the 200-day EMA.

Hence, the benchmark Nifty 50 needs to surpass and sustain above the 25,650–25,700 zone (which coincides with short- and medium-term moving averages) for a further upward journey toward 25,800, followed by 25,900. However, 25,400 is expected to remain a key support, as a decisive close below this level could open the door for 25,300–25,200 levels, according to experts.

The Nifty 50 gained strength after initial volatility and maintained an uptrend till the close. The index soared 117 points (0.46 percent) to 25,571 and formed a bullish candle with an upper shadow on the daily timeframe, following a long red candle in the previous session. This indicates an attempt to bounce back from the lows, though there was some pressure at higher levels.

The RSI sustained below the signal line but inclined upward to 48.35, while the Stochastic RSI maintained a bearish crossover. The MACD moved down closer to the zero line and reference line, with the histogram showing further fading momentum. All this indicates weakening momentum despite the recovery attempt.

“Nifty has failed to show follow-through weakness after one or two sessions of sharp declines on several recent occasions, and Friday's bounce-back could be one of these instances. Hence, one may expect some more upside in the short term,” Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said.

According to him, the Nifty is currently placed at the key support of around 25,400 as per the role-reversal concept, and a sustainable upmove above the hurdle of 25,650–25,700 levels could open another round of relief rally in the market.

On the weekly scale, the Nifty 50 rose just 100 points (0.39 percent) and formed a bullish candle with a long upper shadow, indicating a mild positive bias but pressure at higher levels. The index sustained below the midline of the Bollinger Bands, signalling bearish momentum.

According to monthly options data, the Nifty 50 may find immediate crucial support at 25,500–25,400, while resistance is placed at 25,700–25,800. A decisive move on either side of these levels can provide firm direction to the market.

Meanwhile, the India VIX, the fear gauge, spiked further to the 14.36 zone — the highest level since February 1 — rising 6.71 percent and staying convincingly above all key moving averages, signalling increasing concerns for bulls.

Bank Nifty

The Bank Nifty performed better than the benchmark Nifty 50 and stayed well above all key moving averages, with these averages trending upward. It climbed back above 61,000. The banking index jumped 432 points (0.71 percent) to 61,172 and formed a bullish candle following a long red candle in the previous session, signalling a rebound.

The RSI climbed above the signal line to 58.93, while the MACD maintained a positive crossover, though the histogram signalled further fading momentum. The Stochastic RSI maintained a bearish crossover. All this indicates mixed momentum signals despite the strong price performance.

For the week, the Bank Nifty surged 1.64 percent to end at a new closing high and formed a bullish engulfing candlestick pattern on the weekly timeframe, signalling a positive trend.

“Bank Nifty clearly outperformed during the week, largely driven by strong traction in frontline PSU banking stocks. The 20-day EMA zone of 60,400–60,500 is expected to provide key support,” Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, said.

The 61,700–61,800 range may act as a resistance zone in the short term, he added.