The new week began yet again on a disappointing note. Despite opening with a gap-up, buyers failed to sustain the early morning gains and the bullish momentum carried forward from the previous sessions. Sellers effectively utilized higher prices to erase the initial gains and eventually reverse nearly all the gains recorded in the preceding sessions. Amid sideways price action during the remainder of the session, NIFTY eventually settled at the 22363 mark, registering a loss of 0.70%.

The broader technical setup remains unchanged and tentative, as sellers continued to dominate proceedings, while buyers failed to build on the bullish momentum from the previous session and sustain prices at higher levels. That said, the short-term technical setup appears favorable for a potential bounce, largely supported by oversold readings across most technical indicators. A bullish crossover on the X-Percent Breadth indicator, which tracks the percentage of stocks in a bullish swing on Point & Figure charts, signals an improvement in market breadth and suggests that buying interest may be gradually emerging across the broader market. At the same time, a review of derivative positioning, particularly at the 23300 strike, reveals a Put-Call Ratio (PCR) above 1.2. This suggests that Put writers may retain an advantage heading into the upcoming weekly expiry, provided there is no significant change in the prevailing market dynamics. Going forward, adopting a strategy to buy on dip to support zones, instead of chasing momentum to the upside, given the strong grips of sellers over the market, is likely to yield better results. In terms of levels the 22300-22250 band is an immediate support zone, followed by a stronger support in the 22200-22100 band. On the flip side, the 22450-22500 band is an immediate resistance, followed by a stronger hurdle at 22600.

Despite the frontline indices, giving up gains from prior session, the MIDCAP indices clearly outperformed today, indicating the emergence of some buying interest. We advocated to start entering into MIDCAP with a risk defined approach, and continue to believe such an approach could yield good results over the medium term

Key levels to watch

NIFTY

Support: 22200- 22100

Resistance: 22450- 22400

BANKNIFTY

Support: 54750– 54700

Resistance: 54950– 55000

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