Technical View: 24,000 Likely to be a Key Level for Nifty, but More Profit Booking Possible

Stock Market Trend

On June 28, the Nifty 50 ended its four-day winning streak as investors decided to book some profits on the first day of the July series. The index came close to reaching 24,200 during the day but managed to close above the 24,000 mark. Experts believe that the market, being in uncharted territory, might see some consolidation in the near term. They see support at 23,800 before the index can move up towards 24,500.

The Nifty 50 started the day higher at 24,086 and reached a new high of 24,174. However, it became volatile and finally closed at 24,011, down by 34 points. This formed a bearish candlestick pattern with an upper shadow on the daily charts, indicating selling pressure at higher levels.

“Technically, this pattern suggests a minor negative setup for the market at the highs,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

He mentioned that if the index falls below the 23,800 level, which is the immediate support, it could confirm a short-term top reversal pattern. However, if it moves sustainably above the 24,200 level, this bearish formation could be negated. He advised that any dip from the current levels could be a buying opportunity.

For the week, the index formed a big bullish candlestick pattern, similar to a Bullish Engulfing pattern on the weekly scale. The momentum indicators RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) showed a positive bias, indicating that bulls have the upper hand but are in uncharted territory. The index rose by 2.17 percent or 510 points for the week.

“While the market seems to be in a strong bull run, the next move in the coming week might be challenging as oscillators across all major time frames are in overbought territory. Overbought conditions often indicate potential inherent signs; however, a cool-down in the near term cannot be ruled out,” said Rajesh Bhosale, equity technical analyst at Angel One.

According to the weekly options data, the maximum Call open interest was seen at the 25,000 strike, followed by the 24,500 and 24,000 strikes. The maximum Call writing was at the 25,000 strike, followed by the 24,500 and 24,900 strikes. On the Put side, the 24,000 strike had the maximum open interest, followed by the 23,500 and 23,800 strikes, with the maximum writing at the 23,500 strike, followed by the 24,100 and 23,700 strikes.

This options data suggested that the 24,000 level is expected to be crucial for the Nifty 50’s direction, with resistance at the 24,100-24,200 levels and support at the 23,800 level.

Bank Nifty

The Bank Nifty formed a bearish candlestick pattern on the daily charts, following a High Wave pattern in the previous session. It corrected by 469 points or 0.89 percent to 52,342 due to further profit booking, negating the higher highs-higher lows seen in the previous three days.

“For the selling pressure to continue, there needs to be follow-up selling; otherwise, the index may get stuck in a consolidation range,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

He believes the immediate support is at 52,000, where the highest open interest is built up on the Put side, while the immediate resistance lies in the 52,700-53,000 zone.

Meanwhile, volatility also decreased, providing some comfort to the bulls. India VIX, the fear index, fell by 2.47 percent to 13.8 from 14.15 levels.

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