It turned out to be a volatile session for Nifty. Following weakness in Gift Nifty, the index started the day with a gap-down opening near the 23100 mark. However, strong buying in private banking stocks helped Nifty recover sharply during the first half, pushing prices beyond 23300. The recovery, however, lacked follow-through as selling pressure resurfaced in the second half, erasing the gains and dragging the index lower. Nifty eventually ended the session with a cut of around 0.23%, closing tad above the 23150 mark.

For the fourth consecutive session, Nifty traded within a narrow range, forming yet another small-bodied candle on the daily chart. The index continues to consolidate around the crucial 23100–23000 zone, which coincides with the 61.8% Fibonacci retracement of the entire rally witnessed from the April lows near 22200. Considering the weak market breadth witnessed over the past few sessions, with today’s Advance-Decline ratio also remaining subdued at nearly 1:2, Nifty would ideally have been vulnerable to a breakdown below the 23000 mark. However, the resilience shown by heavyweight private banking stocks has helped the benchmark defend this crucial support zone. Going ahead, the 23100–23000 region remains a key pivot for the market. A decisive break below this support could trigger further weakness towards the 22700 zone, which coincides with the 78.6% retracement of the April rally, and potentially lower levels thereafter. On the upside, Nifty continues to struggle near the 23500 zone, which coincides with the 20DEMA. Until this hurdle is crossed on a sustained basis, upside moves are likely to remain choppy and prone to profit booking. Traders are advised to closely monitor these levels and structure their positions accordingly. Reiterating our recent stance, the Nifty–Bank Nifty ratio analysis continues to favour the banking space. Traders should therefore focus on selective opportunities within the banking sector, where relative outperformance is likely to continue in the near term.

Key levels to watch

NIFTY

Support: 23000 – 22900

Resistance: 23300 – 23500

BANKNIFTY

Support: 54700 – 54500

Resistance: 55600 – 55900

Rajesh Bhosale, Technical Analyst, Angel One