Technical Analysis: Nifty needs to close around 22,300 as negative sentiment is evident and the VIX hits a 15-month high

Technical Analysis: Nifty needs to close around 22,300 as negative sentiment is evident and the VIX hits a 15-month high

According to the weekly options data, the Nifty is likely to find immediate support around 22,300, followed by 22,000, with resistance at 22,600.

The Nifty 50 stayed in the range throughout the session and closed down on May 6 for the second day in a row. Given the growing number of sales relative to purchases and the increased volatility around the 15-month high, the overall attitude seems to be becoming negative. The index attempted to reach 22,600 on Monday, but the volatility and selling pressure erased all gains.

Therefore, if the index breaches 22,300, the long bull candle's low from April 25, the bears might become more powerful and push the index progressively closer to 22,000; nevertheless, if the index rises, 22,600 would act as immediate resistance, according to analysts.

The Nifty 50 began the day higher at 22,562 and reached a day's high of 22,589, but selling pressure at higher levels prevented it from maintaining those gains for very long, and it stayed consolidative for the remainder of the session. Ultimately, the index dropped 33 points to 22,443 and on the daily charts, a bearish candlestick pattern was created.

According to Rupak De, senior technical analyst at LKP Securities, "the sentiment appears relatively bearish due to consecutive red candles, suggesting a prevalence of sellers over buyers, even though the index ended above the short-term moving average, the 21-EMA, on the daily chart."

He believes that as long as it is below 22,500, the feeling may remain muted in the foreseeable future. It is possible for the index to decline to 22,300 on the down side.

The weekly options data also showed that the Nifty is anticipated to find immediate support around 22,300, followed by 22,000, with resistance at 22,600.

According to the weekly options data, the most call open interest was seen at the 23,000 strike, with the highest writing at the 23,000 strike, followed by the 22,800 and 22,700 strikes. On the put side, the most open interest was at the 22,000 strike, which was followed by 22,500 and 21,800 strikes. Writing was at the 22,400 strike, which was followed by 21,700 and 22,300 strikes.

Bank Nifty

On Monday, the Bank Nifty also experienced rangebound trading and finished below 49,000 for an additional day. While holding onto all significant moving averages, the banking index fell 28 points to 48,895 and displayed a bearish candlestick pattern on the daily timescale, suggesting potential weakness in the days ahead.

Technical analysis analyst Jatin Gedia of Sharekhan by BNP Paribas said, "We expect a correction to resume in Bank Nifty which might contribute to a drift towards 48,400 – 48,000 over the next few trading sessions."

He believes that selling on the increase in the vicinity of resistance 49,200–49,300 would be the best trading plan. "Key support is placed at 48,400 – 48,300."

The bulls are now feeling more uneasy as a result of the India VIX, or fear index, which increased 13.56 percent to 16.60, the highest closing level since February 1, 2023. The VIX has increased by 63 percent during the last eight sessions.