After a couple of days of minor gains, the Nifty 50 retreated with a one-third of a percent loss on August 7. However, the index continued to trade within Tuesday's 24,400-24,700 range while taking support at the 24,500 level throughout the week on a closing basis, especially after Monday's strong gap-up opening above the same level. This level coincides with a downward-sloping trendline, which has now turned into support after previously acting as resistance.
Hence, going forward, any decisive fall below the 24,500 level next week cannot rule out the possibility of the index declining toward the 24,380-24,300 zone (its 200-day and 50-day EMAs), followed by 24,200 (near the 50 percent Fibonacci retracement level of the recent sharp rally). On the higher side, however, the 24,700-24,800 zone is expected to remain a crucial hurdle, as a further rally toward the 25,000-25,200 resistance zone is unlikely until the index convincingly surpasses this barrier, according to experts, who added that the broader market structure remains strong.
After opening lower at 24,539, the Nifty 50 remained within an 80-90 point range throughout the session before ending at 24,571, down 65 points (0.27 percent). On the daily charts, the index formed a small bullish candle with a notable upper wick, indicating its inability to sustain higher levels amid range-bound trading.
The momentum indicators signalled sideways action with a lack of bullish intent. The RSI declined to 59.89 but remained above its signal line, while the MACD line continued to trend higher above the zero line. However, the green histogram bars faded for a second consecutive session, indicating weakening bullish momentum despite the prevailing positive trend.
For the week, the Nifty 50 gained 0.77 percent and formed a Doji candle on the weekly timeframe, signalling indecisiveness between bulls and bears after the stellar rally in the previous week. Notably, the index remained above all key moving averages, with short-term moving averages trending upward on both the daily and weekly charts, indicating that the broader structure remains strong. Additionally, the index stayed well above the previous week's high, which is a positive sign.
On the weekly charts, the RSI rose to 54.18 and continued to trend upward above its signal line, while the MACD gradually inched toward the zero line with increasing strength in the green histogram bars, indicating improving bullish momentum and strengthening positive sentiment.
Amol Athawale, VP - Technical Research at Kotak Securities, believes the short-term market outlook remains positive, but a fresh uptrend is possible only after the index decisively crosses the 24,700 level. Above this level, the market could move toward the 200-day SMA at 24,800-24,850, and further upside could lift the index to the 25,000-25,100 zone, he said.
On the downside, according to him, if the index falls below 24,600, it could retest the 24,500-24,450 levels. A breakdown below this zone could accelerate selling pressure and drag the index further toward 24,200.
The weekly options data indicated that the 24,600-24,700 zone is likely to act as immediate resistance, while the 24,500-24,400 zone is expected to serve as immediate support for the Nifty 50.
Meanwhile, the India VIX, which measures expected market volatility, has remained below its short-term moving averages for the past couple of weeks, indicating a continued comfort zone for bulls amid stable market conditions. The VIX ended flat at 12.16 on Friday, while it gained 3.42 percent for the week.
The banking index also reversed most of the previous day's gains and failed to sustain above the 58,000 hurdle. It ended 317 points, or 0.55 percent, lower at 57,746 and formed a bearish candle with a minor upper shadow on the daily charts, indicating weakness throughout the session.
Over the last five trading sessions, Bank Nifty has been consolidating within the 58,248-57,353 range. Despite this consolidation, the index has managed to hold above its 20-day EMA. The ADX has remained flat since the beginning of August, indicating a lack of strong directional momentum in the index.
According to Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, the immediate resistance for Bank Nifty is placed in the 58,200-58,300 zone. Any sustainable move above this zone could result in Bank Nifty extending its pullback toward 58,700, followed by 59,100 in the short term.
On the downside, the immediate support for Bank Nifty is placed in the 57,300-57,200 zone, he said.
For the week, the banking index gained 0.84 percent and extended its uptrend for another week. The index formed a bullish candle with a long upper shadow and a minor lower shadow on the weekly timeframe, indicating its inability to sustain higher levels despite witnessing buying interest at lower levels.
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