Pre- Market Commentary: Nifty is now testing the 23,000–23,100 resistance zone

MUMBAI, 16 OCTOBER: Nifty formed a strong bullish candle, registering a higher high and a higher low, indicating a sharp pullback after the previous session’s consolidation. The index also closed above its 20-day EMA, signalling improving near-term momentum and a pause in the two-month corrective decline.

After opening on a flat note, the index gained momentum and moved above last week’s high of 22,776 in the first hour of trade. Nifty thereafter on expected lines rallied higher to touch an intraday high of 23,056. However, profit booking in the final hour pared some gains, with Nifty closing around the 23,000 mark.

The index is now testing the 23,000–23,100 resistance zone, which coincides with the recent breakdown area and retracement levels of the previous decline. A sustained move above 23,100 will extend the ongoing pullback towards 23,500 levels. Conversely, failure to break this resistance may trigger some consolidation within the 22,500–23,100 range. The near-term pullback remains intact as long as Nifty holds above 22,500.

Bank Nifty: a decisive breakout and sustained move above 56,065

Bank Nifty formed a bullish candle on the daily chart, maintaining its higher-high and higher-low structure following the previous session’s consolidation, indicating a strong pullback and improving near-term momentum.

The index reclaimed the immediate resistance of 55,500 and rallied to an intraday high of 56,065 on expected lines before witnessing some profit booking in the final hour, eventually closing at 55,810.

Going ahead, a decisive breakout and sustained move above 56,065, the Thursday high, could extend the upside towards 56,500. However, failure to sustain above this level may lead to consolidation in the 55,300–56,000 range.

On the weekly chart, Bank Nifty is negating its lower high and lower low structure and is trading above the previous week’s high, keeping the broader recovery intact. A sustained breakout above the crucial resistance zone of 56,000–56,065 would strengthen the bullish bias and open the door for further upside.

Report by: Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)

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