Technical View: Nifty may consolidate further with support at 22,000 mark

Market volatility to continue

Benchmark Nifty 50 saw some more profit booking amid consolidation and closed four-tenth of a percent lower on February 26, after hitting a historic high in previous week.

The ongoing consolidation is likely to continue in the coming sessions too, with the psychological 22,000 mark likely acting as an immediate support, followed by 21,900 as a crucial support, which coincides with 21-day EMA - exponential moving average, while the 22,300 is expected to key hurdle on the higher side, experts said.

On Monday, the Nifty 50 opened lower at 22,169 and hit an intraday low of 22,075 during the day. The index finally settled at 22,122, down 91 points and formed small bearish candlestick pattern on the daily charts, with lower high, lower low formation.

"Overall, the index might remain sideways during the next few days. The range is likely to stay between 22,000 and 22,200. Any breakout on either side might confirm the future directional trend," said Rupak De, senior technical analyst at LKP Securities. However, the short-term texture of the market is still on the positive side.

Shrikant Chouhan, head equity research at Kotak Securities, is also of the view that as long as the index is trading below 22,200, the weak sentiment is likely to continue. "Below which, the market could slip till 22,050- 22,000, while on the flip side, above 22,200 the sentiment could change," he said.

Options data also indicated that 22,200-22,300 is expected to be key resistance area for the Nifty 50 with support at 22,000-21,900 levels.

On the Call side, the maximum open interest was seen at 23,000 strike, followed by 22,500 strike and 22,300 strike, with writing at 22,200 strike, then 22,900 strike and 22,100 strike, while on the Put front, the 21,000 strike owned the maximum open interest, followed by 21,500 strike, and 22,000 strike, with writing at 21,500, 22,100, and 21,900 strikes.

Bank Nifty

The Bank Nifty was also under pressure, continuing southward journey for fourth consecutive session, and fell 235 points to 46,577. The banking index has formed Doji kind of candlestick pattern on the daily charts, indicating indecisiveness among buyers and sellers.

"Despite the volatility, the overall undertone remains bullish, contingent on the index holding the support levels around 46,500-46,400 on a closing basis," said Kunal Shah, senior technical & derivative analyst at LKP Securities.

He said the immediate resistance on the upside is situated at 46,800, and a decisive break above this level is anticipated to propel the index towards 47,000 "where the highest open interest is concentrated on the Call side".