The Nifty 50 could not witness follow-through selling and rebounded sharply after a day of more than 1 percent correction, rising 0.8 percent on June 24. The index continued to defend the 20-day EMA (23,783) support on an intraday basis over the last two sessions, while climbing back above the 50-day EMA, signalling a persistent positive trend. However, near-term consolidation may continue as long as the index remains below the 24,200 resistance level, from where it witnessed profit booking and consolidation after the recent rally.
According to experts, it is necessary for the index to reclaim and sustain above 24,200 to resume its upward journey toward the 24,500 hurdle. Until then, the 20-day EMA is expected to act as support, followed by 23,650 (the midline of the Bollinger Bands) as a crucial support level.
The Nifty 50 traded in positive territory almost throughout the session. It touched an intraday high of 24,090 in the second half before closing above the 24,000 mark at 24,022, up 198 points or 0.83 percent.
On the daily chart, the index formed a sizeable bullish candle following the previous day’s red candle, resembling a Piercing Line candlestick pattern near the 20-day EMA support zone, signalling the possibility of a strong rally in the short term.
The RSI climbed to 56.24 while sustaining a bullish crossover, indicating an improvement in momentum and renewed buying interest. The MACD also remained above the zero and signal lines, although the green histogram bar faded for the fourth consecutive session.
“On the higher end, resistance is seen at 24,500 and 24,800. On the lower end, 23,800 is likely to continue acting as a crucial support level,” said Rupak De, Senior Technical Analyst at LKP Securities.
The monthly options data indicated that the 24,000 strike, which holds the maximum Call and Put open interest, is expected to be a crucial zone for determining further direction, while the broader trading range remains between 23,500 and 24,500.
Meanwhile, the fear index, India VIX, retreated after a day of gains, falling 4 percent to 13.38 while remaining below all key moving averages, which provided comfort to bulls. Sustaining below the 12-13 range is necessary for bulls to remain in their comfort zone.
Bank Nifty
The Bank Nifty also rebounded and recouped all of its previous day’s losses, closing above the 58,000 hurdle (for the first time since March 5) as well as the previous week’s high. It formed a long bullish candle on the daily charts, engulfing the previous day’s red candle.
The banking index surged 967 points, or 1.69 percent, to 58,150 and remained above all key moving averages, signalling a healthy trend. Furthermore, the 20-day EMA moved above the medium- and long-term moving averages, while the short- and medium-term moving averages continued to trend upward.
The RSI rebounded from around the 60 mark to 66.46, signalling a fresh pickup in bullish momentum. The MACD also maintained a bullish crossover, although the green histogram bar contracted for the fourth consecutive session.
The rally was largely driven by strength in heavyweight banking stocks, with HDFC Bank and ICICI Bank both ending the session more than 2 percent higher.
“Going ahead, the immediate resistance for Bank Nifty is placed in the 58,500-58,600 zone. Any sustainable move above this zone could result in Bank Nifty extending its pullback towards 59,000, followed by 59,400 in the short term,” said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.
On the downside, the immediate support for Bank Nifty is placed in the 57,700-57,600 zone, he added.
