Technical Analysis: Nifty Faces Key Resistance at 50-DEMA, Momentum Indicators Remain Bearish

Nifty 50 and Bank Nifty Update (February 25)

Market Performance

The Nifty 50 gained 58 points (0.23 percent) to close at 25,483, forming a small-bodied bearish candle on the daily charts. The Bank Nifty ended 4 points lower at 61,043, forming a small-bodied bearish candle with both upper and lower shadows.

Technical Indicators

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The Nifty 50's Relative Strength Index (RSI) moved upward but remained below the signal line at 46.77, indicating weak underlying momentum. The Moving Average Convergence Divergence (MACD) extended its bearish crossover, while the Stochastic RSI has sustained a negative crossover for a week. The Bank Nifty's RSI failed to climb above the 60 mark and remained below the signal line at 57.09, suggesting a pause in the ongoing bullish momentum.

Key Levels and Support/Resistance

The Nifty 50 needs to sustain above the 25,600-25,700 zone to support a consistent upward rally. The index has been defending the 25,400 level on a closing basis since last week. The Bank Nifty is expected to act as a crucial zone, with a decisive fall below 60,800 opening the door to the 60,000-59,900 zone.

Options Data

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The weekly options data suggests that the 25,500-25,700 zone is expected to act as key resistance for the Nifty 50, with crucial support at 25,000 and immediate support at 25,400. The Bank Nifty's maximum Call open interest was observed at the 25,600 strike, followed by the 25,700 and 26,000 strikes.

Expert Views

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, a bearish descending triangle pattern is unfolding, signaling a sell-on-rise opportunity in the market ahead. Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, expects immediate resistance in the 61,400-61,500 zone for the Bank Nifty.

India VIX

The India VIX cooled below the 14 mark, declining 4.68 percent to 13.49 and extending its downtrend for the third consecutive session, providing some comfort to bulls.