Technical View: Renewed momentum may lift Nifty towards 22,300, India VIX at over 3-month low

Market Today

The Nifty 50 extended the previous day's recovery further and reclaimed the psychological 22,000 mark with above-average volumes on March 21, after the Federal Reserve maintained the rate at 5.25-5.50 percent with sticking to three rate cuts in the current calendar year.

Given the renewed buying interest after the recent weakness and sharp declining volatility, the index may extend its rally towards the 22,200-22,300 levels. If the index holds the 22,200 level in the coming days then one can consider the recent low of 21,710, which is a support for the time being, as a lower top, experts said.

The Nifty 50 had a gap up opening at 21,990 and extended the uptrend up to 22,081. The index saw some profit booking at higher levels in the afternoon and remained volatile with a positive bias in the rest of the trade, before closing at 22,012, up 173 points.

The index has formed a small bullish candlestick pattern with upper and lower shadows on the daily charts. Technically, this pattern indicates a pullback rally in the market post-downward correction.

"Having negated the bullish pattern like higher tops and bottoms recently, the present pullback is expected to form a lower top in the next few sessions," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

He feels further upside from here could pull Nifty towards the crucial overhead resistance around 22,150-22,200 levels in the short term. Any decline from here could drag Nifty down to 21,700 level again in the near term, he said.

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

The above options data indicated that 22,000 is expected to be a crucial mark for further market direction with resistance at 22,100 and 22,300 levels and immediate support at the 21,900 level.

The Bank Nifty snapped a nine-day losing streak and jumped 374 points to 46,685. The banking index had a positive opening and climbed back above the 50-day EMA (exponential moving average). It has formed a Doji sort of candlestick pattern on the daily charts as the closing was near its opening levels but has seen higher highs and higher lows formation indicating the weakening bear power.

"Sentiment improved as the index broke out above the recent consolidation. Over the short term, the index could move towards 47,000; a decisive move beyond 47,000 might propel it towards 47,700," Rupak De, senior technical analyst at LKP Securities said.

Support is situated at 46,300 on the lower end, he added.

The broader markets also gained major strength as the Nifty Midcap 100 and Smallcap 100 indices rallied 2.4 percent and 2.5 percent on strong breadth.

Meanwhile, the volatility dropped sharply, giving more comfort to bulls. India VIX, the fear gauge, fell 7.12 percent to 12.51, the lowest closing level since December 14, 2023.