Nifty Requires Sustained Buying to Reach 23,000, Consolidation Expected in the Near Term; Bank Nifty Faces Key Resistance at 52,200, VIX Slows 10% Decline

Nifty 50 Kicks Off New Financial Year on a Positive Note Despite Uncertainty

The Nifty 50 began the April series and the new financial year with a strong rally, fueled by short covering amid optimism about a potential de-escalation in geopolitical tensions. The index surged over 1.5 percent, snapping a two-day losing streak. However, uncertainty driven by the US-Iran conflict still looms large, making the sustainability of this rally a key factor to watch in the upcoming sessions.

The index's lower high–lower low formation remains intact, with prices consistently trading below all key moving averages, which are trending downward. However, a formation of triple divergence has emerged, with prices making lower lows while the Relative Strength Index (RSI) is making higher lows. The RSI has sustained above its reference line and has risen, but remains below the 40 zone. The Moving Average Convergence Divergence (MACD) has continued to consolidate for about a week, but remains below both the signal and zero lines, while the histogram's weakness has slightly faded. These indicators suggest a potential early sign of stabilization, though confirmation is still awaited.

According to experts, the Nifty 50 needs to reclaim and sustain above 23,000 for a further upmove, with the immediate hurdle placed at 22,800. The 23,500 level, which coincides with the 20-day Exponential Moving Average (EMA), is expected to be a crucial hurdle. Sustaining above this level could possibly trigger a new leg of rally. Until then, consolidation with range-bound trading may continue, with immediate support at 22,500, followed by a crucial support level at 22,300.

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Nifty 50 Trading Statistics

Despite the positive close, the formation of a bearish candle on the daily chart signals a strong presence of sellers at higher levels.

The index opened nearly 567 points higher around the 22,900 zone and climbed to 22,941 but failed to sustain those levels due to profit booking at higher levels amid uncertainty related to the Iran conflict. The index erased 262 points from the day’s high before closing at 22,679, up by 348 points (1.56 percent).

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Sustained support for the Nifty is placed in the 22,550–22,500 zone, according to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. Any sustained move below this zone could result in the Nifty extending its weakness towards 22,300, followed by 22,100 in the short term. On the upside, the 22,800–22,850 zone is likely to act as immediate resistance.

Weekly options data suggests that the Nifty 50 may trade within a range of 22,500–23,000 in the short term. The maximum Call open interest is placed at the 23,500 strike, followed by the 23,000 and 23,200 strikes, while the 22,500 strike holds the maximum Put open interest, followed by the 22,000 and 22,700 strikes.

The India VIX, the fear gauge, fell 10.3 percent to 25.01, signaling some comfort for bulls. However, it needs to fall sharply below the 22 level to provide further support to bullish sentiment.

Bank Nifty Rebounds Following Sharp Correction

The banking index also rebounded following a sharp correction in the previous couple of sessions, rising 1,173 points (2.33 percent) to 51,449 after a gap-up opening. On the daily chart, the index formed a small-bodied bullish candle with shadows on both sides, indicating intraday indecision despite a strong close.

Bank Nifty also exhibited a clear positive divergence on the RSI in the daily chart, with prices making lower lows while the RSI made higher lows, signaling a potential recovery phase. However, the broader trend remains negative, with a continuation of the lower high–lower low formation and all moving averages trending downward.

In the near term, the outlook appears bullish, with scope for further upside momentum, according to Vatsal Bhuva, Technical Analyst at LKP Securities. Immediate support is placed at the 50,500 level, while resistance is seen in the 51,800–52,000 zone. A sustained move above the resistance zone could trigger a recovery towards 52,900–53,000 levels. However, a breakdown below 50,500 may lead to a fresh round of selling pressure.