Technical View: Nifty defends 21,900 with bullish candle, 22,450 crucial for upward journey

Nifty likely to face resistance at 22,300-22,400

The Nifty 50 rebounded sharply after a day of steep fall and nicely defended 21,900 for yet another session on March 14, with decline in volatility below 14 mark.

As long as the index stays above 21,860, the crucial level for breaking the higher highs, higher lows formation, the major correction can be ruled out, experts said, adding the decisive rebound above 22,450, the high of previous day's long bear candle, can bring back the positive mood at Dalal Street.

The Nifty 50 hit a day's low of 21,918 in initial trades, but after an initial hour of volatility, the index gained strength and remained positive in rest of the session. The index rose 149 points to 22,147 and formed bullish candlestick pattern on the daily charts after long bearish candlestick pattern in previous session, indicating a pullback rally in the market.

"Nifty is expected to find strong hurdle of mid part and upper part of long bear candle of Wednesday around 22,175 and 22,450 levels respectively. A sustainable upside bounce of Thursday could be a cheering factor for bulls to make a comeback," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

As long as the last higher bottom of 21,860 is protected, the chances of significant downward reversal could be doubtful, he feels.

A strong follow-through upmove from here could pull Nifty towards the hurdle of 22,450-22,500 levels, he said, adding any failure could open another round of weakness from the lower highs.

As per the weekly options data, the maximum Call open interest was seen at 22,200 strike, followed by 22,300 to 22,500 strikes, with meaningful Call writing at 22,200 strike, while on the Put side, the 22,100 strike owned the maximum open interest, followed by 22,000 strike and 21,900 strike, with writing at similar strikes in similar sequence.

The above options data indicated that 22,100-22,200 is expected to be key area for the Nifty 50 for further direction, with hurdle on the higher side at 22,500 level, and support at 21,900 mark.

The Bank Nifty extended southward journey with lower highs, lower lows formation for fourth consecutive session and formed Doji kind of candlestick pattern on the daily charts as the closing was near opening levels, indicating indecisiveness among bulls and bears.

The banking index declined 191 points to 46,790 with above average volumes, due to selling in large banks, but defended 50-day EMA (exponential moving average placed at 46,600).

"Immediate resistance is noted at the 47,500 mark, and a conclusive break above this level on a closing basis would signal a resumption of upward momentum towards all-time highs," said Kunal Shah, senior technical & derivative analyst at LKP Securities.

Conversely, the lower end support is situated at the 46,700-46,500 zone, and a break below this level on a closing basis could intensify downward momentum towards the 46,000 mark, he feels.

Meanwhile, the India VIX, the fear gauge, declined 5.6 percent to 13.62 from 14.43 levels, giving comfort for bulls.

The broader markets also bounced back sharply, with the Nifty Midcap 100 and Smallcap 100 indices climbing 2 percent and 3.5 percent respectively.