The Nifty 50 recovered sharply from its intraday low for a second consecutive session on Wednesday, but technical indicators continued to point to a weak market structure.
The index rebounded nearly 250 points from the day's low and trimmed losses before ending 77.95 points, or 0.33%, lower at 23,405.60. Buying emerged after the benchmark filled the April 8 gap area, helping banking stocks lead a recovery despite a sharp decline in IT shares.
The move highlights a market that continues to attract buying at lower levels even as volatility remains elevated and broader technical signals stay under pressure.
Volatility Remains Above Average
The Nifty's daily trading range stood at 308 points, its narrowest in four sessions. Even so, the range remained above the 10-day average for a fourth straight day, indicating that market swings remain higher than usual.
Wednesday's trading formed a small-bodied candle with a long lower shadow, resembling a Dragonfly Doji pattern. The formation points to buying interest at lower levels. However, lower volumes compared with the previous session suggest the rebound still lacks broader participation.
Technical Setup Stays Under Pressure
The benchmark formed another lower-low candle, with Wednesday's low of 23,151 becoming the latest swing low. It also filled the April 8 gap area during the session.
The index remains below all key moving averages and failed to move above the previous day's high. It did, however, hold the 50% retracement level of the move from the April 2 low to the April 21 high, a level that could influence the near-term trend.
Nifty currently trades 1.18% below its 50-day moving average. The lower Bollinger Band has provided support over the past two sessions. At the same time, the MACD continues to indicate increasing bearish momentum, while the Elder Impulse System has produced a series of bearish bars.
Key Levels For Nifty
For the trend to improve, the Nifty must close above its 50-day moving average near 23,685 and its 20-day moving average near 23,737. The index also needs to form a higher low to signal that selling pressure is easing.
On the hourly chart, the benchmark appears to be forming a double-bottom pattern with a neckline around 23,560. That level is likely to act as immediate resistance. A sustained move above it could pave the way for an advance towards 23,685 and 23,737.
On the downside, support is placed at 23,230, followed by 23,100.
Stock In Focus: Federal Bank
Banking shares outperformed the broader market on Wednesday, with Federal Bank standing out on technical charts.
The stock broke out of a three-month cup-and-handle pattern and closed at a record high. It also moved out of a 23-day consolidation phase, signalling renewed buying interest.
Its Relative Strength line climbed to a fresh high, indicating outperformance against the broader market.
Federal Bank continues to trade above all key moving averages. Bollinger Bands, which had narrowed during consolidation, have started expanding, suggesting an increase in volatility in the direction of the breakout.
The MACD has delivered a fresh bullish crossover, while the 14-day RSI has moved above 60 after finding support near its nine-period average. Other momentum indicators have also strengthened. The KST is nearing a fresh bullish signal, the Stochastic RSI remains in bullish territory and the Elder Impulse System has generated a bullish bar.
The stock has entered new high territory after breaking out of the pattern. A move above Rs 303 could strengthen momentum and create room for a rise towards Rs 328 and then Rs 335. A stop loss may be placed at Rs 283.
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