Technical View: 22,500 to play crucial role for Nifty, India VIX drops below 14 mark

Nifty needs to hold 22,500 for further uptrend

The Nifty 50 continued to end at record closing high amid rangebound trade on March 7, with consistently declining India VIX, which favoured the bulls. The index maintained higher highs, higher lows formation as well as stayed above all key moving averages on the daily as well as weekly charts, indicating the sentiments are in support to the bulls.

Hence, the index may face immediate resistance at 22,600, followed by 22,800 level, with support at 22,400 then 22,200, experts said.

The Nifty 50 finally surpassed the much awaited 22,500 mark with opening at 22,505 and hit a new intraday high of 22,526. After volatility throughout session, it settled at 22,494, up 20 points, forming Doji sort of candlestick pattern on the daily charts, indicating indecisiveness among bulls and bears about future market trend.

For the week, it gained half a percent and formed bullish candlestick pattern with long lower shadow on the weekly scale, suggesting buying interest at lower levels.

"On daily and intraday charts, the market is holding higher, high and higher low formation and on weekly charts, the Nifty has formed breakout continuation formation, which is largely positive," Shrikant Chouhan, head equity research at Kotak Securities said.

For positional traders now, he feels 22,200 would act as a trend decider level.

"Above 22,200, the market could move up till 22,650-22,800. On the flip side, below 22,200, the sentiment could change. Below 22,200, the market could slip till 22,100. Further down side may also continue which could drag the index till 21,950," he said.

Options data indicated that 22,500 is expected to be crucial for direction in the Nifty 50 in coming sessions, with resistance at 22,600-22,700, and immediate support at 22,400.

On the Call side, the maximum open interest was seen at 22,500 strike, followed by 23,000 strike and 22,700 strike, with meaningful writing at 22,500 strike, then 22,900 & 22,600 strikes, while on Put front, 22,500 strike owned the maximum open interest, followed by 22,400 and 22,000 strikes, with writing at 22,500 strike, then 22,400 strike.

Bank Nifty

The Bank Nifty retreated some losses on profit booking after surpassing 48,000 mark, and settled at 47,836, down 130 points. The index has formed bearish candlestick pattern on the daily timeframe, while for the week, it was up 1.2 percent and saw bullish candlestick pattern formation on the weekly scale with higher highs, higher lows formation for four weeks in a row.

"Bank Nifty faced resistance at the 48,000 level, finding support at 47,750. Nevertheless, the weekly closure indicates a resilient bullish momentum, with pivotal support identified at 47,500 and resistance at 48,200," said Rupak De, senior technical analyst at LKP Securities.

He feels a conclusive breach above the 48,200 threshold, confirmed by a closing basis, could catalyze a bullish upswing towards levels of 48,500 and 48,800.

The volatility dropped below 14 mark, giving more favourable to bulls. India VIX dropped 4.77 percent to 13.61 (the lowest level since January 16), continuing downtrend for seventh consecutive session and reached closer to 200-day EMA (exponential moving average), while for the week, it was down 9.2 percent.

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