Nifty, Nifty Bank retreat after hutting all-time high. Next stop?

At 15:30 hrs IST, the Sensex was down 188.50 points or 0.25 percent at 74,482.78, and the Nifty was down 55.10 points or 0.24 percent at 22,588.30

As Nifty 50 and Bank Nifty retreated from all time highs in intraday trade analysts advise avoiding to build aggressive long positions at these levels and watch for volatility before indices resume upmove to fresh highs.

Earlier today, NSE Nifty 50 reached a high of 22,783.35, while Bank Nifty climbed to 49,974.75. Both the indices gave up gains, and ended in mild red for the day at 22,605 and 49,397, respectively.

A sustained breakout in Nifty 50 above the previous high (22,775) could extend the upward move towards 23,000-23,050, based on retracement levels, said Ruchit Jain, Lead Researcher at 5Paisa.com.

“Bank Nifty has achieved a new record high and is displaying signs of outperformance. The index may rally towards 50,590 in the short term, which corresponds to the 161.8 percent retracement level of the recent corrective phase,” Jain added.

Sudeep Shah, DVP and Head of Technical and Derivative Research at SBI Securities, noted 22,540-22,500 as the crucial support zone for the Nifty index. "As long as this zone is held, the index is likely to sustain its upside momentum towards 22,770-22,800."

"Any sustained move below the level of 22,500 could trigger profit booking in the index, leading to a decline towards 21,400-21,350," said Shah.

Arun Kumar Mantri, Founder of Mantri Finmart, anticipates resistance for Nifty around 22,850-22,900, followed by 22,950, where extension levels are observed and some overbought conditions have emerged after recent price action.

"We expect the index to consolidate from current levels; it may test the 22,850-22,900 mark with a good accumulation zone around 22,500-22,550 levels. The supports for the coming weeks are placed at 22500 and 22450 while resistance is at 22820 and 22900 on the higher side."

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Regarding Bank Nifty, Mantri expects the index to encounter resistance around the psychologically significant level of 50,000-50,200 on the upside, with support established around 48,400-48,600 on the downside.

"Short term traders may approach ‘buy on declines’ in the indices and avoid longs from current juncture. The target on the higher side is around 50,000-50,200 in the coming days. Traders should gear up for huge volatility in the coming days, and should avoid heavy positions in the derivatives space," Mantri said.

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