Technical View: Nifty 50 Faces Weakening Momentum as VIX Recedes Below 15, Bears Favor Fall Below 23,800; Bank Nifty's 54,500 Seen as Key Support

Market Update: Nifty 50 and Bank Nifty End May 27 Trading Session with Mixed Results

The Nifty 50 index experienced a choppy trading session on May 27, the first day of the June series, closing flat with a negative bias. However, trading volume was significantly higher than average, reaching its highest level since April 29. The index faced resistance at the 50-day EMA (24,000), a crucial level for any further upside toward 24,100 and then 24,300–24,400. Despite this, the index remains above the previous congestion breakout zone of 23,800, which coincides with the 10-day and 20-day EMA, and this can act as immediate support.

After opening moderately lower, the Nifty 50 index rebounded to 23,983 but gradually erased those gains as the day progressed. The index finally ended the range-bound session at 23,907, down 7 points.

Technical Analysis Suggests Underlying Strength

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

On the daily charts, the Nifty 50 index formed a small-bodied bullish candle with a noticeable upper wick, reflecting profit booking at higher levels. A similar upper wick was seen in the previous session as well, highlighting the index's inability to sustain at higher levels, with the 50-day EMA continuing to act as a stiff resistance zone. The RSI, at 51.35, moved sideways but still held above the signal line, while the MACD maintained a positive crossover with further expansion in the histogram's green bars. The Stochastic RSI also trended higher above the reference line, indicating underlying strength in the market despite the lack of decisive upward momentum.

Derivative Data Suggests Sideways to Mildly Positive Trend

According to Vatsal Bhuva, positional support for the Nifty 50 index is placed at the 23,650 level. On the weekly derivatives front, both Call and Put writers remained active, with significant Call writing at the 24,000 strike establishing it as a strong resistance zone, while aggressive Put writing at 23,900 indicates immediate support. On the higher side, the 24,500 strike, which has the next highest Call open interest, is expected to be a crucial hurdle for the index. Meanwhile, 23,500, which has the next highest Put open interest, is likely to be critical support.

India VIX Declines Below 15 Zone

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The India VIX, the fear index, declined below the 15 zone as well as below all key moving averages, closing 7.13 percent lower at 14.98 (the lowest closing level since February 27), signalling rising support for bulls and easing uncertainty. It has shed 25 percent over the last seven sessions. Sustaining below the 15 mark is necessary to keep bulls in the comfort zone.

Bank Nifty Corrects Below 55,000 Level

The banking index also corrected for another session, falling below the 55,000 level to close at 54,854, down 239 points (0.43 percent). Bank Nifty formed a small-bodied bearish candle with an upper wick for the second consecutive day, signalling its inability to hold higher levels due to selling pressure. Similar to the Nifty 50, Bank Nifty also failed to hold above its 50-day EMA (55,250) and ended the session below it, which remains crucial for any further upside toward 55,800.

Support and Resistance Levels for Bank Nifty

According to Sudeep Shah, the immediate resistance for Bank Nifty is placed in the 55,200–55,300 zone. Any sustainable move above this zone could result in Bank Nifty extending its pullback toward 55,700–55,800, followed by 56,100 in the short term. On the downside, support for Bank Nifty is placed in the 54,400–54,300 zone.

Note: The table above represents the Call and Put open interest for the Nifty 50 index on the weekly derivatives front.