On September 23, 2024, the Nifty 50 maintained its upward trajectory, moving closer to the key psychological barrier of 26,000. With this bullish momentum, the index is expected to breach the 26,000 level in upcoming sessions. However, experts emphasize that sustainability beyond this mark will be crucial for continued gains. On the downside, 25,800 is expected to serve as immediate support, while 25,500 will be a crucial level to watch.
Nifty 50 Performance: The Nifty 50 opened higher at 25,873 and remained in positive territory throughout the day. It touched a new intraday high of 25,956 before consolidating slightly and closing at 25,939, gaining 148 points. This marked a new record close for the index, which has been on a winning streak for three straight sessions. On the technical front, the index has formed a bullish candlestick pattern on the daily charts, bolstered by positive trends in momentum indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD).
Expert Analysis: Shrikant Chouhan, Head of Equity Research at Kotak Securities, pointed out that the daily charts show a bullish candlestick formation, indicating further upward movement. The index has been forming a "higher highs-higher lows" pattern, which reinforces its positive momentum. However, Chouhan warns that despite the bullish market sentiment, overbought conditions could lead to a period of rangebound activity in the short term. For day traders, the 25,850–25,800 zone will act as strong support, while the immediate resistance levels lie between 26,050 and 26,100. If Nifty fails to hold above 25,800, the uptrend could be at risk, prompting traders to exit long positions.
Options Data: Analysis of monthly options data reveals that the maximum Call open interest is at the 27,000 strike price, suggesting this could be a medium-term target for the Nifty 50. Other key levels include 26,000 and 26,500 strikes. The highest Call writing was observed at the 27,000 strike, followed by the 25,900 and 26,400 strikes, indicating that 26,000 is a critical resistance point. On the Put side, the 25,000 strike holds the maximum open interest, with 25,500 and 25,700 being other significant levels. Put writing was most active at the 25,900 and 25,800 strikes, further confirming that 26,000 is a key resistance level, while support is solid around 25,800.
Bank Nifty: The Bank Nifty index also continued its rally for the eighth consecutive session, crossing the 54,000 mark for the first time. It rose by 313 points to close at 54,106, forming a bullish candlestick pattern on the daily charts, supported by strong momentum indicators. According to Chandan Taparia, Senior Vice President and Analyst of Derivatives at Motilal Oswal Financial Services, the Bank Nifty needs to stay above the 53,750 zone to maintain its upward movement towards 54,500 and 55,000 levels. On the downside, support has shifted higher to 53,750, with additional support at 53,500.
Volatility and India VIX: Volatility saw a sharp increase, though it remained at relatively low levels below the 14 mark. The India VIX, often referred to as the "fear gauge," rose by 7.78% to 13.79 from 12.79 in the previous session. If the VIX climbs above the 15 mark and sustains, it could signal increased caution for bulls, as higher volatility could lead to more unpredictable market movements.
Outlook: While the overall market sentiment remains bullish, experts are keeping a close eye on key levels. Nifty is expected to test the 26,000 resistance soon, but sustainability beyond this point will be crucial. A correction could be on the cards if the index fails to hold above 25,800. Meanwhile, the Bank Nifty's strength signals continued upward momentum for banking stocks, with the index aiming for 54,500–55,000 levels in the near term.
In conclusion, while the market is in a bullish phase, short-term caution is advised as overbought conditions and rising volatility may lead to consolidation or minor corrections. Traders are encouraged to adopt a trailing stop-loss strategy to safeguard their gains, particularly if Nifty struggles to maintain its momentum beyond the 26,000 level.
