Technical View: Nifty consolidates again, decisive close above 22,550 can drive index towards uncharted territory

The Nifty 50 closed yet another volatile session marginally lower on April 3 and continued to face resistance at 22,500-22,550 zone since last Thursday, as market participants may be waiting for the outcome of Monetary Policy Committee scheduled on April 5. If the index manages to give decisive close above 22,550, then the next key levels to focus on would be 22,700-22,800, while the 22,300 is likely to be the immediate support for the Nifty50, experts said.

The Nifty 50 opened lower and hit an intraday low around 22,350 in morning, but managed to rebound in afternoon to hit a day's high of 22,521. The index wiped out the same gains in last hour of trade and finally settled at 22,435, down 19 points.

The index has formed small bullish candlestick pattern with upper shadow on the daily charts. Technically, this pattern indicates broader range movement in the market near all-time highs.

The smaller degree positive pattern like higher tops and bottoms is intact as per daily chart. "And present weakness could be in line with new higher bottom of the sequence. Hence, any weakness from here could be a buy on dips opportunity," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

He feels the near-term uptrend of Nifty remains intact and a decisive move above 22,550 is likely to pull Nifty towards the next crucial hurdle of 22,800 levels in a quick period of time. Immediate support is at 22,300 levels, he said.

The options data indicated that 22,500 is the key hurdle for the Nifty 50 as surpassing the same on closing basis can drive it towards 22,700-22,800 levels, while on the support side, 22,200 is the key to watch out for.

On the weekly options front, the maximum Call open interest was seen at 22,500 strike, followed by 23,000 and 22,800 strikes, with meaningful Call writing at 22,800 strike, then 22,500 and 22,700 strikes, while on the Put side, the 22,000 strike owned the maximum open interest, followed by 22,100 strike, then 22,200 strike, with writing at 22,000 strike, then 22,100 and 22,400 strikes.

The Bank Nifty continued to sustain above the downward sloping resistance trendline, adjoining highs of March 6 and March 28, for third consecutive session and formed bullish candlestick pattern on the daily charts, with above average volumes, as the buying was seen in select banking stocks.

The index showed smart recovery from day's low and got back above 47,500 level, rising 79 points to settle at 47,624.

"The banking index has to continue to hold above 47,250 level to extend the move towards 48,000 then 48,250 levels, whereas on the downside support is expected at 47,250 and 47,000 zones," Chandan Taparia, senior vice president | analyst-derivatives at Motilal Oswal Financial Services said.

The volatility cooled down further, consistently giving more comfort and support to the bulls. The India VIX, the fear index, slipped 2.4 percent to 11.37 level, the lowest level since November 24, 2023.