Technical View: Nifty 50 Trends Positive Amid Profit Booking, Key Supports in Focus

Nifty 50 Witnesses Profit Booking, Consolidation Amid F&O Expiry Session

The Nifty 50 index witnessed profit booking and fell by half a percent on May 26, amid consolidation following two days of gains, while defending the 23,900 mark on a closing basis. The index failed to sustain above the 50-day Exponential Moving Average (EMA) and the psychological 24,000 mark, but still held above the short-term moving averages (10- and 20-day EMAs, both of which continued to trend upward), though the previous day's bullish gap was partially filled.

Momentum Indicators Remain Supportive

The momentum indicators continued to play a supportive role, with the Relative Strength Index (RSI) holding above the 50 zone at 51.51 with a bullish crossover, though slightly tilted downward. The Moving Average Convergence Divergence (MACD) maintained a positive crossover with the histogram's green bars expanding further, along with a continued correction in India VIX. All this indicates that the broader trend remains positive despite near-term consolidation.

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Key Levels to Watch

The index needs a convincing close above 24,000 for a move toward 24,126 (the upper end of the May 11 gap-down range), followed by 24,300 (the 50 percent Fibonacci retracement of the correction from the February high to the April low). Until then, consolidation may continue, with the immediate crucial support zone placed at 23,850-23,800 (the midline of the Bollinger Bands and the 20-day EMA). A break below this zone may widen the selling pressure, according to experts.

Nifty 50 Daily Chart

After opening slightly lower, the Nifty 50 recovered and climbed toward the immediate target, but the rally remained restricted to 24,090, the intraday high, before profit booking emerged in the second half of the session. Eventually, the index settled well below the psychological mark at 23,914, down 118 points, or 0.49 percent. On the daily charts, the index formed a sizeable bearish candle with an upper shadow, indicating profit booking and the presence of resistance around the 24,100 level.

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Bank Nifty Witnesses Profit Booking

The banking index also witnessed some profit booking, falling 201 points, or 0.36 percent, to 55,093, but the overall trend remains positive. The higher high-higher low formation continued, and the index sustained above the short-term moving averages as well as the midline of the Bollinger Bands, though it failed to sustain above its 50-day EMA after closing above the same in the previous session.

Relative Rotation Graph (RRG)

A closer look at the Relative Rotation Graph (RRG) indicates that the private banking space remains better placed to outperform in the near term, as it is positioned in the leading quadrant, reflecting strong relative strength and momentum. PSU banks, however, continue to remain in the lagging quadrant and may underperform vis-à-vis private banks.

Key Levels for Bank Nifty

According to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, the immediate resistance for Bank Nifty is placed in the 55,500-55,600 zone. Any sustainable move above this zone could result in Bank Nifty extending its pullback toward 56,000, followed by 56,400 in the short term. On the downside, the immediate support for Bank Nifty is placed in the 54,700-54,600 zone.

India VIX Falls

Meanwhile, the India VIX, the fear gauge, extended its downward journey and fell 3.4 percent to 16.13, signalling a lower possibility of any major downside as uncertainty reduced further. A decisive fall below the 15 level can provide major comfort for bulls.

Comparison of Nifty 50 and Bank Nifty Performance