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The Indian stock market is currently exhibiting a state of uncertainty, with both the Nifty 50 and Bank Nifty indices struggling to decisively break through key resistance levels. Several market analysts have provided their insights and strategies for navigating this complex market environment. The Nifty 50 closed with a marginal loss, failing to sustain above its 5-day and 10-day Exponential Moving Averages (EMAs). The index is currently confined within a range of 22,200 to 22,700. Experts suggest a sell-on-rally approach as long as the index remains below 22,700, which acts as a significant resistance level. A decisive break below the 22,200 support level could trigger increased selling pressure, potentially pushing the index towards 22,000. Conversely, the Bank Nifty needs to break and sustain above the 48,500–48,600 zone to initiate a further rally towards 49,000. Until then, the index is expected to consolidate within a range, with support lying in the 48,000–47,800 zone. The 20-day EMA for Nifty is currently at 22,610, while for Bank Nifty, it stands at 48,600. This underscores the importance of these levels as potential triggers for market movements.
Dhupesh Dhameja, Derivative Analyst at Samco Securities, notes that the Nifty wrapped up the previous week with a slight loss, displaying indecisive performance and leaving market participants in a wait-and-watch mode. Despite earlier attempts at recovery, the index failed to maintain its upward momentum, reinforcing the prevailing sideways market structure. On the daily chart, the Nifty has been consistently trading below its 20-day EMA, struggling to overcome the 22,500 mark, which has emerged as a formidable resistance zone. On the lower end, the index has established a strong support base at 22,200, supported by substantial Put writing, further solidifying the rangebound trend. Dhameja highlights the 22,200–22,300 zone as a critical support area for the bulls, preventing further downside. However, a convincing breakout above 22,550 is essential for bullish momentum to regain strength. He suggests that as long as the Nifty sustains above the 22,200 support zone, any dips are likely to attract fresh buying interest. On the upside, 22,700 remains a significant hurdle, making it a challenging level to breach. Dhameja recommends a Range Trading Strategy for the upcoming expiry, involving buying and selling call and put options at specific strike prices to capitalize on the expected rangebound movement, with a defined stop-loss and target profit.
Chandan Taparia, Head Derivatives & Technicals at Motilal Oswal Financial Services, observes that the Nifty started the previous week on a relatively flat note but faced strong resistance around 22,676, leading to profit booking and a subsequent decline. The Nifty has been stuck within a 250–300 point range, lacking a clear directional move. Option writers have been dominating the market, and the sharp decay in option premiums has made it a challenging environment for option buyers. Taparia points out that the Nifty formed a bearish candle and an inside bar on the daily chart, indicating that selling pressure remains intact at higher zones. He suggests that the Nifty must hold above 22,330 for an upward move towards 22,650 and then 22,800, while support can be found at 22,300 and 22,222. Taparia recommends buying Nifty Futures on dips with support at 22,300, targeting upside levels of 22,650/22,800.
Hardik Matalia, Derivative Analyst at Choice Broking, notes that the Nifty formed a strong bearish-bodied candle on the daily chart, indicating significant selling pressure throughout the session. He suggests that bears remained in control, pushing the index lower without any notable intraday recovery or buying interest. Matalia identifies immediate support at 22,300, with a potential break below this level triggering further selling towards the 22,200–22,000 range. On the upside, he sees immediate resistance at 22,550, with a critical hurdle near 22,700. He emphasizes that sustaining above these levels is crucial to halt the ongoing downtrend. Matalia advises that as long as the Nifty remains below the 22,700 mark, a sell-on-rise strategy is likely to prevail, with any short-term rebounds facing selling pressure. He recommends traders maintain strict stop-loss measures and avoid overnight positions due to heightened volatility. Matalia suggests selling Nifty Futures on a rise near the 22,600 level, targeting 22,300–22,200, with a stop-loss at 22,700 on a closing basis.
Turning to the Bank Nifty, Dhupesh Dhameja highlights that the index ended the previous week on a muted note, exhibiting lackluster and directionless movement. On the daily chart, the index has been consistently trading below its 10-day EMA, struggling to break past the 48,500 mark, which has emerged as a formidable resistance level. On the lower side, 47,800 has proven to be a strong base, supported by substantial Put writing. Dhameja points out that heavy accumulation on both the Call and Put sides indicates a battle between bulls and bears, increasing the likelihood of prolonged consolidation. He sees the 47,800–48,000 zone as a critical support base for the bulls, while a firm breakout above 48,500 is necessary to trigger fresh buying interest. Dhameja suggests that as long as the Bank Nifty sustains above 47,800, any dips are expected to invite renewed buying pressure. He recommends a Range Trading Strategy for the upcoming expiry, involving buying and selling call and put options at specific strike prices to capitalize on the expected rangebound movement, with a defined stop-loss and target profit.
Hardik Matalia observes that the Bank Nifty continues to trade below all its key moving averages, including short-term, medium-term, and long-term EMAs, indicating persistent selling pressure at higher levels. He believes that as long as it remains below these moving averages, the overall sentiment remains sideways to bearish, favoring a sell-on-rise approach. Matalia identifies immediate resistance at 48,500, with a stronger hurdle at 48,800, and suggests that any rise toward these levels is likely to attract selling pressure. A decisive breakout above 49,000 is required to negate the bearish outlook. On the downside, he sees 47,800 as immediate support, followed by 47,500, and a break below these levels could accelerate selling pressure. Matalia advises traders to sell on rises near resistance levels while maintaining strict stop-loss measures. He emphasizes the importance of closely monitoring price action around key levels. Matalia suggests selling Bank Nifty Futures on a rise near 48,800, targeting 48,000–47,500, with a stop-loss at 49,000 on a closing basis.
Chandan Taparia notes that the Bank Nifty formed a bearish candle on the daily scale, indicating missing momentum at higher zones. He suggests that on the weekly scale, it formed a small bearish candle as selling pressure was seen at higher levels, but multiple supports remain intact at lower levels. Taparia believes that the Bank Nifty must hold above 48,000 for a bounce toward 48,250 and 48,500, while holding below this zone could lead to weakness toward 47,750 and 47,500. Taparia recommends buying Bank Nifty Futures on dips with support at 47,750, targeting upside levels of 48,250/48,500. In summary, the analysis suggests a cautious approach to both the Nifty and Bank Nifty, with a focus on key support and resistance levels, and the use of range-bound trading strategies or sell-on-rise approaches depending on the index and individual risk tolerance. Monitoring key levels and maintaining strict stop-loss measures are repeatedly emphasized due to the current market volatility and uncertainty. The article serves as a guide to potential trading strategies but does advise consulting with certified experts before executing any investment decisions.
Source: Trading Plan: Will Nifty, Bank Nifty manage to surpass 20-day EMA?