NIFTY had another disappointing day of trade, as prices failed to sustain at relatively higher levels. Starting the session with a gap-up opening, the initial bullish momentum quickly faded as sellers effectively utilised the higher levels to exert pressure. As a result, the early morning gains were swiftly erased, with prices eventually closing near the early morning lows. The index settled at the 23873 mark, registering a loss of 0.17%.

The outlook on the frontline index, as advocated in our prior commentary, continues to warrant caution. The inability of buyers to sustain higher levels following a gap-up opening has further dented the technical structure, while simultaneously weighing on market sentiment. The rejection observed today from the 24000 mark, in line with the principle of polarity, indicates that a previous support level has now turned into resistance. This also establishes a lower resistance level, alongside the formation of a lower low on the index. The combination of a lower low and a lower high point towards an established downtrend, highlighting the clear need to exercise caution. We continue to believe that the index is likely to test the previous swing low near 23600 in the near term. In terms of levels, the 23800–23750 band remains an immediate and crucial support zone. A decisive daily close below this band is likely to open the door for a further probe, initially towards the 23500–23450 zone in the short term. On the upside, the 24000–24050 band, which acted as an important support zone until recently, is now likely to emerge as an immediate resistance, followed by a stronger hurdle in the 24150–24200 band.

A short-term trend reversal on the MIDCAP index as well augurs the need to adhere caution in the immediate term. Given the developing situation, participants should continue to adopt a cautious approach and avoid the urge to venture into aggressive overnight positions, until a trend reversal is confirmed.

Key levels to watch

NIFTY

Support: 23800- 23700

Resistance: 24050- 24200

BANKNIFTY

Support: 56900– 56800

Resistance: 57700– 57800

Hitesh Rathi, Technical Analyst -Equity & Derivatives, Angel One.