It was an encouraging week of trade for NIFTY, with the index recovering nearly all the losses incurred during the preceding week. Despite a slightly lower start, prices rebounded swiftly as buyers were quick to capitalize on the relatively lower levels. The index subsequently extended its gains following a brief phase of sideways consolidation, eventually closing the week at 23053, up 2% for the week.

On a weekly basis, NIFTY continues to remain range-bound, extending its sideways trajectory for the fifth consecutive week. The sharp rebound witnessed this week from the 22500–22400 band reinforces the presence of strong demand at lower levels and highlights the significance of the rising trendline on the weekly chart, which has repeatedly acted as a sacrosanct support. Furthermore, the considerable improvement in overall market breadth and sentiment has helped ease concerns among market participants. That said, stiff overhead resistance continues to make the path to higher levels challenging. Going forward, unless the index delivers a convincing breakout above the 23150–23200 band, caution remains warranted, with a conscious effort to avoid chasing upward momentum. A decisive breakout above this resistance band would mark the formation of the first higher high–higher low structure on the daily chart, signaling a potential shift in the short-term trend. A weekly close above this crucial zone would further confirm the breakout on the weekly timeframe. In terms of levels, immediate support for the index is now likely to be found at the 22950-22900 band, followed by a stronger cushion at the 22800 level. On the flipside, 23100-23160 band is an immediate hurdle, followed by a stronger resistance at the 23400-23450 band.

Market participants should avoid getting carried away by the recovery witnessed across the broader markets this week, despite the stronger rebound in the frontline indices. The trend across multiple timeframes for both SMALLCAP and MIDCAP indices continues to remain aligned to the downside. Consequently, any potential breakouts in these segments should be viewed with caution, treated with a degree of skepticism, and approached with strict risk management.

Key levels to watch

NIFTY

Support: 22800- 22700

Resistance: 23100- 23160

BANKNIFTY

Support: 54500– 54400

Resistance: 55100– 55350

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