Technical View: Decisive close above 22,200 can drive further rally in Nifty on F&O expiry session

22,200 crucial for further rally in Nifty

The Nifty 50 recouped all its previous day's losses and traded higher throughout the session on March 27, a day before the monthly expiry of March futures & options contracts. The index faced strong resistance at the 22,200 level as breaking the same can drive the index initially towards the 22,300-22,400 levels and then record high, experts said, adding the key support is likely to be at the 21,900 level.

The Nifty 50 opened higher at 22,054 and climbed up to 22,194 in the afternoon. Finally, the index settled at 22,124, up 119 points and formed a bullish candlestick pattern with an upper shadow on the daily charts. The good point is that the index closed above the downward sloping resistance trendline adjoining multiple touchpoints from record high levels and with this, also trading above all key moving averages.

"The overall chart pattern of the market remains positive with rangebound action. Nifty is currently placed at the upper range of 22,200 levels. A decisive break above this hurdle is expected to bring sharp upside momentum towards new all-time highs," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

Any weakness from here could drag Nifty down to 21,900 levels again, he feels.

The options data indicated that the Nifty may face an immediate resistance at 22,200 levels with support at 22,000 and 21,900 levels.

As per the monthly options data, the 22,500 strike owned the maximum Call open interest followed by 22,600, 22,400 and 22,200 strikes with meaningful Call writing at similar strikes, while on the Put side, the maximum open interest was visible at the 22,000 strike followed by 22,100 and 21,900 strikes with writing at 22,100 strike and then 22,000 and 21,900 strikes.

The Bank Nifty rebounded with 186 points gains to close at 46,786 and formed a bullish candlestick pattern with an upper shadow on the daily charts. Overall, the index has remained rangebound for the fourth consecutive session facing crucial resistance at the 47,000 mark and taking support at 46,500. This indicates the breaking of resistance can drive the index towards 48,000 in coming sessions, whereas below the 46,500 level, 46,200 can be the next support level.

"Bank Nifty is consolidating within the range of 46,500-47,000 since the last four trading sessions. A breach of this range shall lead to trending moves in that direction," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

He expects the banking index to break out on the upside and expects levels of 47,270-47,300 from a short-term perspective hence one can go long with a stop-loss of 46,530.