NIFTY had an encouraging expiry session, as the ongoing losing streak finally came to a halt. Despite a gap-down opening, buyers successfully defended crucial support levels and subsequently launched a sharp recovery around midday, recouping all the losses incurred earlier in the session. Thereafter, amidst some expiry-related volatility, prices wrapped up the day at the 23483 mark, registering gains of 0.43%.

On the daily chart, not much has changed, notwithstanding the willingness of buyers to step in around key support levels. The overall structure continues to suggest that prices remain confined within a range, with 23200 acting as support and 24000 as resistance. However, buyers did manage to form a bullish piercing candlestick pattern, and the location of this formation, near important support levels, indicates the presence of strong buying interest at lower levels. That said, despite today’s sharp recovery, prices failed to close back above the upward-sloping trendline that was breached yesterday, highlighting the intense tug-of-war between buyers and sellers for control of the trend. Going forward, if buyers manage to defend the immediate support zone of 23250–23200, we do not foresee any significant downside extension. However, a breakdown below this support band could accelerate the ongoing decline, initially dragging prices towards the strong support area around the bullish gap near 23100, and subsequently opening the door for a possible retest of the 22700–22600 zone, which also coincides with the 78.6% retracement level of the prior rally. On the flip side, a series of stiff resistance levels is likely to cap any recovery attempts. The immediate resistance zone is placed in the 23550–23600 band, followed by a stronger hurdle in the 23750–23950 zone, where both the 20 DEMA and 50 DEMA are currently positioned.

Prices are clearly oscillating within a well-defined range, where a strategy of buying near strong support levels and booking profits or selling near resistance zones can be considered. At the same time, sectoral rotation continues to be the dominant theme in the market. Therefore, identifying and focusing on stocks from sectors exhibiting relative strength on a given day is likely to yield better trading opportunities and potentially generate superior returns.

Key levels to watch

NIFTY

Support: 23250 – 23200

Resistance: 23750 – 24000

BANKNIFTY

Support: 53150 – 52750

Resistance: 54400 – 55100

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