Technical View: Nifty Faces Resistance at Weekly High of 24,800, Bank Nifty's Support Lying at 56,800

Nifty 50 Bounces Back, Rises Over 150 Points

The benchmark Nifty 50 delivered a healthy performance, rising more than 150 points on April 17 after a day of profit booking. This significant gain took the total weekly rally to 1.26 percent, representing a continuation of the upward journey for the second consecutive week amid rising hopes of a potential Middle East resolution and consistent buying interest from Foreign Institutional Investors (FIIs) in the past few sessions. Now, the index spiked nearly 10 percent from its April low of 22,182.

Technically, the index closed well above the 50-day Exponential Moving Average (EMA) as well as the 50 percent Fibonacci retracement of the correction from the February high to the April low. Meanwhile, short-term moving averages have consistently trended upward, and the two bullish gaps created since the recovery from the April low have remained intact, indicating a gradual improvement in underlying sentiment.

In addition, the momentum indicators remained healthy, with the Relative Strength Index (RSI) rising to 57.11, while the Moving Average Convergence Divergence (MACD) maintained its uptrend and moved close to the zero line with a healthy green bar in the histogram. All this indicates a strengthening bullish momentum.

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The Nifty 50 faced resistance at 24,400, which is the current week's high, for the second consecutive week, which is crucial for further northward movement. If the index convincingly moves above the 24,400 zone, a rally toward 24,700-24,800 (closer to the 100- and 200-day EMAs) is very much possible in the upcoming sessions. On the downside, support is placed at the 24,100-24,000 levels, according to experts.

The Nifty 50 gained strength after initial volatility and moved upward as the day progressed, hitting an intraday high of 24,372 in late trade. The index rallied 157 points (0.65 percent) to close at 24,354 and formed a bullish candle on the daily charts, which overlapped the bearish candle of the previous session.

Technically, this market action indicates a strong uptrend in the market with minimal downward correction in between.

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The weekly options data suggests immediate resistance at 24,500 and support at 24,200-24,000 for the Nifty 50 in the short term. The maximum Call open interest was placed at the 25,000 strike, followed by the 24,800 and 24,500 strikes, while the 24,000 strike holds the maximum Put open interest, followed by the 24,200 and 23,800 strikes.

The maximum Call writing was observed at the 25,000, 25,050, and 24,600 strikes, while the maximum Put writing was seen at the 24,000, 24,300, and 24,200 strikes.

Meanwhile, the fear gauge India VIX persistently trended down, declining 4.87 percent to 17.2 on Friday and sinking over 40 percent from its current year's high of 28.9 on March 30. With this, the index fell below its short- and medium-term moving averages, signalling comfort for bulls. However, it needs to fall further below the 15 level to provide stronger support to bullish sentiment.

Bank Nifty Also Participates in the Rally

The banking index also participated in the rally and outperformed the benchmark Nifty 50, rising 479 points (0.85 percent) to 56,566 on Friday and gaining 1.17 percent for the week, in addition to an 8.47 percent surge in the previous week.

On the daily charts, the Bank Nifty formed a bullish candle alongside the previous day's red candle and closed well above the 50-day EMA as well as the 50 percent Fibonacci retracement (of the fall from the February high to the April low), signalling an improving bullish bias with limited downside.

The 10- and 20-day EMAs have consistently trended upward, with the 10-day EMA holding above the 20-day EMA. Meanwhile, momentum indicators strengthened further, with the RSI rising above the 56 level and the MACD gradually climbing toward the zero line.

On the weekly timeframe, the Bank Nifty formed a long green candle and continued its higher high–higher low structure for the second consecutive week.

For the last three sessions, Bank Nifty has been consolidating within the 56,834-55,842 range. A decisive breakout on either side of this band is likely to set the tone for the next directional move.

"Going ahead, the immediate resistance for Bank Nifty is placed in the 56,900-57,000 zone. Any sustainable move above this zone could result in Bank Nifty extending its upward move towards 57,400, followed by 57,800 in the short term," said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

On the downside, the 56,100-56,000 zone is likely to act as immediate support, he added.