Technical View: Consolidation and minor profit booking can't be ruled out next week with support at 21,900

Nifty may consolidate further after hitting a new high

The Nifty 50 has seen trend reversal after hitting new high and closed flat with negative bias on February 23, but overall, bulls still hold strong control over Dalal Street. The index has formed bearish candlestick pattern on the daily charts as the closing was lower than opening levels, but still continued higher highs formation for eighth consecutive session.

Hence, the minor profit booking along with consolidation can't be ruled out next week with support at 21,900, which coincides with 21-day EMA (exponential moving average), while in case of a bounce back, the index may make an attempt to march towards 22,500, the key resistance area, experts said.

The Nifty 50 opened higher at 22,290 and hit an intraday record high of 22,297.50 in the morning, but overall remained volatile and rangebound for rest of the trading session. The index finally ended at 22,213, down 5 points.

"Nifty is currently placed at the previous broken resistance area of 22,200 levels. Having failed to continue with strong upmove at new highs, the market could shift into further consolidation or minor weakness in the next week," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

On the weekly charts, the Nifty 50 gained 0.8 percent and formed bullish candlestick pattern with upper and lower shadow, with higher high, higher low formation.

Nagaraj feels the near-term uptrend of Nifty remains intact. "Having faced hurdle at 22,250-22,300 levels, there is a possibility of minor dip in the market in next week and that could be a buy on dips opportunity," he said.

On the options front, the maximum Call open interest was seen at 23,000 strike, followed by 22,500 strike & 22,300 strike, with Call writing at 23,100 strike, then 22,300 & 23,000 strikes. On the Put side, the maximum open interest was visible at 22,000 strike, followed by 21,500 strike, with writing at 22,200 strike, then 21,200 strike.

The above options data indicated that the immediate support for the Nifty 50 may be at 22,000 mark, with hurdle on the higher side at 22,500 level.

Bank Nifty

The Bank Nifty extended downtrend for third consecutive session, falling 108 points to 46,812 and formed bearish candlestick pattern on the daily charts, but still held on to its support of 46,500 level. Overall, it has been into consolidation mode for the week passing by.

During the week, the index gained 0.92 percent and formed bullish candlestick pattern with long upper shadow on the daily charts, indicating selling pressure at higher levels.

"The Bank Nifty index maintained its robust momentum, breaking past the 46,500 level, which is now established as a formidable support. Any retracement towards this support zone presents an ideal opportunity to initiate long positions, targeting an upside of 48,000," Kunal Shah, senior technical & derivative analyst at LKP Securities said.

He feels the immediate hurdle for the index is situated at 47,100, and a conclusive break above this level would signify a resumption of the uptrend toward the mentioned targets of 48,000.

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