Nifty forms Engulfing Bear candle post record high; consolidation likely in near term

The Nifty50 index continued to touch record highs but failed to build on early gains and came under pressure on February 21 after posting positive returns in last six days.

After hitting new high of 22,249.40 in early session, the Nifty index witnessed rangebound movement in the first half. However, profit booking led by majority of sectors in the second half dragged the Nifty to day’s low of 21,997.95, forming Engulfing Bear candle on a daily chart.

At close, the Nifty was down 142 points or 0.64 percent at 22,055.

“The Nifty opened on a positive note and consolidated in a narrow range during the first half. Selling pressure emerged during the second half and Nifty closed in the red down ~142 points. Until today’s high of 22,249 is not taken out we can expect consolidation in the near term,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

“On the downside, the Nifty has crucial support zone placed at 21974 – 21930 which coincides with the 38.2% Fibonacci retracement level (21974) and the gap area formed on the 16th February. We believe that the index is in the process of retracing the rise it has witnessed from 21530 to 22249,” he added.

The Nifty Bank remained in consolidation mode as it moved in the range of 47,363.40 – 46,886.95, intraday, before closing with minor losses at 47,019.70.

“The BankNifty index experienced a volatile trading session during the weekly expiry and encountered resistance around the 47300 levels. Currently stuck in a broad range of 46500-47500, the index faces limitations on further upside until it surpasses the 47300 mark,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

“The immediate support stands at 46800, and a breach below this level could intensify selling pressure, potentially pushing the index towards 46500,” he added.

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