Technical View: After hitting record high, Nifty now has 22,600 in sight

The Nifty made a dramatic turnaround in the last couple of hours to hit a new high on March 6, led by gains in banking and technology names.

The index started the day in the red and sank to the day's low of 22,224 amid volatility. It, however, gained strength in the dying hours of the trade to hit a new high of 22,497. It settled at 22,474, up 118 points, a new closing high for the 50-pack index.

The index formed a long bullish candlestick on the daily charts, with above-average volumes.

It decisively climbed back above the upward-sloping resistance trendline after a day of break and also defended the 10-day exponential moving average (EMA) placed at 22,270.

Given the optimism, the Nifty is likely to face resistance at 22,600-22,700 in the coming sessions, with support at 22,300-22,200, experts said, adding the consistent fall in volatility also gave comfort to bulls.

The momentum indicators relative strength index (at 64) and moving average convergence divergence also showed positive bias on the daily and weekly charts.

"We expect Nifty to continue with the up move as the hourly momentum indicator has provided a fresh crossover which is a bullish sign. The immediate target is placed at 22,600 – 22,650," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

The day's low of 22,224 will act as a crucial support and can also be used as a trailing stop-loss for long positions, he said.

The weekly options data suggests that the 23,000 strike owned the maximum Call open interest, followed by 22,800 and 22,700 strikes, with meaningful Call writing at the 22,800 strike then 22,700 and 22,600.

While on the Put side, the maximum open interest was at the 22,000 strike followed by 22,300 and 21,800 strikes, with writing at the 22,300 strike, then 22,400.

The data indicates that Nifty may find a hurdle at 22,600-22,700 on the higher side, with support at 22,400-22,300.

Bank Nifty

The banking index reclaimed the much-awaited resistance of 48,000. It settled at 47,965, up 384 points.

It also formed a long bullish candlestick on the daily timeframe with healthy volumes on the weekly F&O expiry day. It decisively maintained a downward sloping resistance trendline for the third straight session, which is a positive sign.

"The ongoing bullish sentiment is evident, backed by a robust support zone established at 47,500-47,400, serving as a defensive line for the index," Kunal Shah, senior technical & derivative analyst at LKP Securities said.

The index is expected to hit new highs in the next few sessions, with potential targets at 49,000 and 50,000 in the near term, he said.

Volatility declined for the sixth consecutive session. India VIX, the fear gauge, fell 0.6 percent to 14.30, from 14.38 levels.

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