The Nifty 50 failed to hold gains on Thursday after opening nearly 170 points higher, as selling pressure near key resistance levels dragged the index into negative territory by the close. The index ended 4.30 points, or 0.02%, lower at 23,654.70 after slipping more than 200 points from the day's high.
The move highlighted the market's continued inability to sustain above the 23,860 resistance zone, even after briefly trading above the 50-day moving average and nearing the 20-day moving average. The index has remained locked in a consolidation band between 23,260 and 23,860 for more than a week, with repeated failures near the upper end of the range signalling caution among traders.
Consolidation Phase Continues
Thursday's session remained volatile, with the Nifty moving in a range of nearly 263 points. The ongoing consolidation phase has now lasted around seven trading sessions, compared with the previous consolidation period between April 23 and May 11, which continued for nearly 12 sessions. The current phase may therefore continue for another four to five sessions before a decisive move emerges.
The day's price action formed a bearish candle on the daily chart, indicating that buyers continue to struggle near overhead resistance. However, the formation of higher lows on the daily chart suggests that the support structure has not weakened completely.
Momentum Indicators Remain Weak
From a technical perspective, the Nifty closed below both the eight-day exponential moving average and the 50-day moving average. The index also failed to sustain above the previous swing high of 23,839 after an attempted breakout from a pennant-like pattern lost momentum.
Momentum indicators continued to reflect the lack of clear direction. The 14-period daily relative strength index stayed below the 50 mark, while the hourly RSI failed to cross 60 before slipping below 50. The moving average convergence divergence indicator also remained flat, signalling weak momentum. The pattern of alternating gains and losses over recent sessions pointed to continued indecision in the market.
Key Levels for Friday's Trade
A decisive close above 23,860 remains critical for the next leg of the market move. Given repeated failures near this level, analysts said the resistance may only be cleared if the index opens with a strong gap-up above 23,860 and sustains those levels through the session.
On the downside, immediate support is seen around 23,500, while stronger support remains at 23,260. A close below 23,260 could weaken the near-term structure and raise the possibility of the index slipping below 23,000.
Stock In Focus
Deepak Fertilisers and Petrochemicals Corporation has broken out of a pennant-like formation on the daily chart, signalling a continuation of the earlier uptrend. The breakout was accompanied by above-average trading volumes, which supported the move.
The stock's 14-period daily RSI has generated a bullish crossover and is moving higher, while the daily MACD is also nearing a bullish crossover, indicating strengthening momentum. Sustaining above the Rs 1,397-1,400 zone could open the possibility of an upside move towards Rs 1,500-1,540. A stop loss can be placed at Rs 1,308.
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