Technical View: Nifty Eyes Rally Post-Consolidation; Bank Nifty Must Hold Key Support Levels
The Nifty 50 continues to consolidate within a narrow range, with minor profit booking marking the session on December 9. Market participants seem to be awaiting fresh triggers to determine the next move. For now, defending the 24,500 level on a closing basis remains critical for a potential upward rally in the sessions ahead.
Nifty 50: Key Levels to Watch
The index touched an intraday high of 24,705 and a low of 24,580 before closing at 24,619, down 59 points. It formed a small bearish candle, resembling a Doji-like pattern, reflecting indecision between buyers and sellers.
According to technical experts, the 24,500-24,450 zone serves as an immediate support area, while the 24,700-24,775 range acts as a crucial resistance. A breakout above 24,700 (the midpoint of the Bollinger Bands) could propel Nifty toward 25,000. However, failure to hold 24,500 may see the index testing support at 24,200 and 24,000.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, advises level-based trading, suggesting traders exit long positions if the index breaches 24,450.
Options Data Insights:
The Nifty 50 is likely to trade within the 24,000-25,000 range, as indicated by weekly options data.
On the Call side, maximum open interest is at the 25,500 strike, followed by 25,000 and 24,700, with significant writing at the 24,700 and 25,000 strikes.
On the Put side, the maximum open interest is at 24,000, followed by 24,500 and 24,600, with notable writing at the 24,600 strike.
Bank Nifty: Holding 53,250 Is Crucial
The Bank Nifty witnessed minor profit booking for the second consecutive session, closing 102 points lower at 53,408. The index formed a Gravestone Doji, a bearish reversal pattern, on the daily charts. Moreover, a Tweezer Top-like formation in the previous session signals caution for traders.
Chandan Taparia of Motilal Oswal Financial Services highlights that the 53,250 zone is a critical support level for the Bank Nifty. If sustained, it could push the index toward 54,000 and the lifetime high of 54,467. However, a breach below 53,000 may prompt traders to reassess long positions.
Volatility Check:
The India VIX, an indicator of market volatility, remained subdued, slipping to 14.11 from 14.14, which is favourable for bullish momentum.
Conclusion
Both Nifty and Bank Nifty are poised for potential rallies if they hold their key support levels. Traders should keep a close watch on 24,500 for Nifty and 53,250 for Bank Nifty. Maintaining a level-based approach, supported by clear technical indicators, could prove advantageous in these uncertain conditions.
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