Buyers yet again defended the crucial support zone, launching a sharp bounce back thereafter. Following a muted open, buyers straight away jumped into action, pushing prices higher by more than 300 points in early hours of trade. A mid-day bout of profit booking threatened to reverse all the early morning gains, but a sudden news flow, resulted in sharp spikes across frontline indices, which saw the index jump close to 150 points in a short span, to wrap up the day at the 22721 mark, with gains of 1.6%.

Despite the sharp recovery witnessed today, the broader technical setup remains unchanged. Prices continue to oscillate within a 10-day trading range, with buyers and sellers continuing to wrestle for control. That said, strong demand is becoming increasingly evident at lower levels, particularly in the 22250–22100 band. The significance of this support zone is further reinforced by the formation of multiple bullish patterns on the short-term Point & Figure charts, including a Weak Bearish Breakdown, a Swing Bullish Engulfing, and a 100% Bullish Pole. However, strong overhead resistance in the 22750–22800 band continues to pose a significant hurdle to any sustained recovery. Going forward, as advocated in our previous commentaries, a decisive break down below the 22250–22100 support zone would be required to signal further deterioration. Until then, considering that prices remain stuck in a range, and the immediate trend remains aligned to the downside, adopting a buy-on-dips approach is likely to yield better results than chasing upward momentum. In terms of levels, immediate support is now likely to be found in the 22350-22300 band, whereas the 22750-22800 band is an immediate hurdle, followed by a stronger hurdle at 22950-23000 band.

With frontline indices as well now, suggesting the establishment of a strong support at lower levels, we continue to advocate entering into strong MIDCAP and SMALLCAP stocks, from a medium to long term horizon.

Key levels to watch

NIFTY

Support: 22350 – 22300

Resistance: 22750 – 22800

BANKNIFTY

Support: 55000 – 54700

Resistance: 55800 – 55900

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