Technical Analysis Suggests Nifty 50 Vulnerable to Further Decline, With 23,900 a Key Support Level; Bank Nifty Bears May Target 55,800

Nifty 50 Falls Below 50-Day EMA Amid Rising Oil Prices and Bearish Crossover

The Nifty 50 index fell eight-tenths of a percent on April 23, closing below its 50-day Exponential Moving Average (EMA) after a gap-down opening for the second consecutive session. The decline in the index was weighed down by rising oil prices amid the standoff in US-Iran negotiations, which led to a cautious sentiment among bulls. Momentum indicators also signalled caution, as the Relative Strength Index (RSI) failed to cross the 60 mark and is on the verge of a bearish crossover.

If the index extends its selling pressure, a fall towards 24,000–23,900 (near the 23.6 percent Fibonacci retracement of the recent rally from the April low and the 20-day EMA) cannot be ruled out in the upcoming sessions. However, immediate resistance is placed at 24,350, followed by the 24,500–24,600 zone, according to experts.

Nifty 50 Performance

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The Nifty 50 opened 175 points lower at 24,202 and remained under pressure throughout the session. The index finished at 24,173, down 205 points (0.84 percent), and formed a bearish candle with a long upper shadow, indicating selling dominance at higher levels. The index has slipped below its 50-day EMA, which is a key medium-term support level, and has moved closer to the 10-day EMA.

The daily stochastic oscillator has triggered a bearish crossover, while the Moving Average Convergence Divergence (MACD) remained above the signal and zero lines, but the histogram’s green bars faded further. All this indicates weakening momentum and a cautious undertone in the near term. The opening downside gap of Thursday remains unfilled, indicating a short-term reversal pattern after a hefty upmove from the lows in the last couple of weeks.

Technical Analysis

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The bullish pattern of higher tops and higher bottoms remains intact on the daily chart, and the present weakness could possibly form a new higher bottom within the pattern, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities. The short-term trend of the Nifty remains subdued, but the overall near-term pattern remains positive. “The present weakness is likely to find support around the 24,000–23,900 levels before bouncing back. Immediate resistance is placed at 24,400,” he added.

Options Data

Monthly options data suggests that 24,000 could act as immediate support for the Nifty 50, as it has the maximum Put open interest. Meanwhile, 24,500 may remain a crucial resistance on the higher side, as it has the maximum Call open interest.

India VIX

The India VIX has not seen a major upmove and has largely remained within the 50- and 100-day EMA range for the past six straight sessions, though it has risen 1.58 percent to 18.59, on top of a 4.38 percent increase in the previous session. This suggests that a convincing move above the 19–20 zone could again put bulls at risk, while a fall below the 16 level may bring comfort to bulls.

Bank Nifty

The banking index started the session more than 500 points lower at 56,609 and fell below the 200-day EMA (56,700) as well as the 100-day EMA (57,050). The index closed near the 50-day EMA at 56,305, declining 819 points (1.43 percent) and underperforming the benchmark Nifty 50.

The Bank Nifty formed a bearish candle with an upper shadow, indicating selling pressure at higher levels, along with a weakening medium-term structure and cautious sentiment among participants. The RSI is on the verge of a negative crossover, while the MACD stayed above the zero and reference lines, but the histogram’s green bars faded further. All this indicates weakening momentum and the possibility of further downside in the near term.

Bank Nifty Support and Resistance

Going ahead, “the 55,900–55,800 zone is expected to act as crucial support, as a prior swing low is placed in this region. Any sustained move below 55,800 may intensify weakness and result in further correction towards the 55,200 level,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities. On the upside, the 200-day EMA zone of 56,650–56,750 will act as an immediate resistance area, he added.