Bears May Strengthen Hold if Nifty 50 Falls Below 23,250; 52,700 Key Support for Bank Nifty

Nifty 50 Shows Resilience, Defends Key Support Zone

The Nifty 50 index saw a sharp recovery of 333 points from the day's low to close flat with a positive bias on May 18, defending the key support zone of 23,300-23,250. Despite oil prices trading around $100 a barrel and the VIX climbing closer to the 20 level, technical indicators remained in favor of the bears.

However, if the Nifty 50 fails to defend 23,250, a fall towards the 23,150-23,100 levels is possible in the upcoming sessions. On the higher side, the 23,800-23,900 zone is expected to be a key hurdle, and only a convincing move above it can open the door for 24,000-24,100.

Key Index Performance

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The benchmark index opened 161 points lower and corrected up to 23,317. After an initial hour of volatility, the index gradually recouped those losses and finally ended the session at 23,650.

On the daily charts, the Nifty 50 formed a bullish candle with a lower shadow and filled the opening bearish gap, signaling a positive trend and a healthy recovery from the day's low. However, the index continued to trade below all key moving averages (10, 20, 50, 100, and 200-day EMAs), all of which trended southward, signaling prevailing bearish sentiment. The momentum indicators and oscillators also turned bearish, with the RSI at 45.26 remaining sideways and below the reference line.

Expert Insights

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According to Nilesh Jain, VP and Head of Technical and Derivative Research at Centrum Finverse, the immediate hurdle for the Nifty is placed near its 50-DMA at 23,770, while key support is seen around the 23,300 level. Overall, experts expect the Nifty to trade in a broader range of 23,250-23,800 in the near term.

The weekly options data also signaled that 24,000 and 23,800 are expected to be the next resistance levels for the Nifty 50, where the maximum Call open interest is placed. The crucial support is seen at 23,000, which has the maximum Put open interest, followed by the 23,500 to 23,300 strikes, which can act as an immediate support zone.

Bank Nifty Performance

The banking index also recouped all its opening losses and filled the bearish gap, closing off the day's low at 53,537 points. The Bank Nifty formed a bullish candle with a minor upper shadow and a long lower shadow on the daily charts, indicating a strong recovery from the day's low.

Despite this recovery, the banking index still traded below all key moving averages, all of which trended downward. Additionally, the index remained below the 50 percent Fibonacci retracement of the April rally. The RSI, at 40.69, remained below the reference line, while the MACD maintained a sell crossover.

Immediate Support and Resistance

Going ahead, the immediate support for Bank Nifty is placed in the 53,100-53,000 zone, and any sustainable move below this zone could result in the index extending its weakness towards 52,700, followed by 52,400 in the short term. On the upside, the immediate resistance for the index is placed in the 53,900-54,000 zone.