Technical View | Nifty faces stiff resistance at 19,850, likely to consolidate further

The Bank Nifty was the biggest loser among key sectors, falling sharply below the 44,000 mark and closing 578 points or 1.31 percent down at 43,584 after an increase in risk weight on consumer credit exposure by RBI

The Nifty50 snapped a two-day winning streak and closed the rangebound session on a negative note on November 17. The index has seen stiff resistance at 19,850 and remained within the previous day's range. Given, the strong weekly trend, the ongoing consolidation may continue for some more sessions with support at 19,600-19,500 levels, and if the index decisively takes out 19,850, then a strong rally can be possible towards the 20,000 mark, experts said.

The Nifty50 opened lower at 19,675 and made an attempt to rebound and stay above 19,800, but failed in the late morning deals. The index largely remained lower amid volatility in the rest of the session and closed 33 points down at 19,732, forming a bullish candlestick pattern with a long upper shadow on the daily scale, indicating the selling pressure at higher levels.

"The formation of long upper shadows in the last two sessions indicates the presence of strong overhead resistance around 19,850 levels. The positive chart pattern like higher tops and bottoms is intact as per daily chart and Thursday's swing high of 19,875 could be considered as a new higher top of the sequence," Nagaraj Shetti, technical research analyst at HDFC Securities said.

Hence, any decline from here could open a possibility of higher bottom formation around 19,600-19,550 levels in the coming sessions, he feels.

"The near-term uptrend status of the market remains intact, but there is a possibility of some more consolidation or minor weakness for the Nifty in the next 1-2 sessions," he said.

For the week, the Nifty50 gained 1 percent and continued higher highs and higher lows formation for the second consecutive week.

Options data also indicated that 19,800-19,900 will be the resistance area for the Nifty50 in the immediate term, with support at 19,600-19,500 levels.

On the weekly Options front, the 19,800 strike has the maximum Call open interest, followed by the 19,900 strike with meaningful Call writing at the 19,800 strike then at the 19,900 strike, while the maximum Put open interest was at the 19,700 strike followed by 19,600 strike and 19,500 strike, with Put writing at 19,100 strike then at 19,000 & 19,500 strikes.

The Bank Nifty was the biggest loser among key sectors, falling sharply below the 44,000 mark and closing 578 points or 1.31 percent down at 43,584 after an increase in risk weight on consumer credit exposure by RBI. It has seen a gap down opening.

The index has formed a bearish candlestick pattern with a long upper shadow and minor lower shadow on the daily charts and fell below the 20-day EMA. The next strong support is at 200-day EMA (43,300), while 44,000-44,400 will be the resistance area.

"The index's next support is situated at the 43,300-43,250 zone, serving as a crucial line of defence for the bulls. If this level holds, it could pave the way for a potential recovery towards the 44,000 mark," Kunal Shah, senior technical & derivative analyst at LKP Securities said.

However, a breach of the mentioned support may intensify selling pressure, leading the index further down towards the 42,700 level on the downside, he feels.

But there was no major weakness in the broader space as the Nifty Midcap 100 and Smallcap 100 indices gained 0.2 percent and 0.09 percent, respectively. Even, the NSE breadth was slightly in favour of advances.