F&O Manual | Rangebound trade to continue until Nifty shoots past 22,500

April 24, 2024 / 12:20 PM IST

India VIX plunged 20% in the last session.

Benchmark indices Nifty 50 and Sensex saw another session of rangebound trade so far on April 24, mirroring the overnight surge in the US market and subsequent gains in Asian equities. Going ahead, analysts expect the rangebound trade to be prolonged until the Nifty 50 manages to break above its resistance at 22,500.

The volatility index, India VIX, also recovered around 3 percent after a 20 percent slump to a five-month low in the previous session. Despite the slight recovery, however, the fear gauge remained at lower levels of around 10.

While a slump in the fear gauge shows confidence in the ongoing rally, Sudeep Shah, DVP and head of derivative and technical research at SBI Securities, feels that investors must not turn overconfident as generally crashes in India VIX to this extent have been seen after major events.

On that account, he suggests feel investors to carefully see whether VIX sustains at lower levels for the next few sessions before being too complacent with over-leveraged positions within the current uptrend.

Around noon, the Sensex was up 255.24 points or 0.35 percent at 73,993.69, and the Nifty was up 74.50 points or 0.33 percent at 22,442.50. On the other hand, India VIX was up 3.3 percent to 10.54.

According to Tejas Shah of JM Financial, the Nifty 50 is facing a lot of resilience around 22,400-22,500 levels for the past couple of days on an immediate basis. For that, the Nifty needs to stage a decisive close above 22,400-500 levels for further strength in the index or else reversal is likely from this resistance zone.

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Shah also agrees as he too feels that a sustainable move above the level of 22,510 will lead to an extension of the Nifty 50's rally towards 22,650-22,700 in the short term. "If in case index slips below 22,350, it will lead to further selling pressure in the index up to the 22,230-22,150 level," he said.

Bank Nifty

Bank Nifty is trading near its crucial resistance zone of 48,000 to 48,200 levels and Shah of JM Financial believes that the sectoral index would further outperform only if it is able to decisively close above this resistance zone.

In case Bank Nifty fails to break above that level, profit-booking is likely from the current levels, believes Shah of JM Financial.

On the downside, Shah of JM Financial pegs the support for Bank Nifty in the range of 47,500-47,600 while he sees the resistance around the 48,000-48,500 zone.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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