Trading Plan: Will Nifty manage to hit 25,000, Bank Nifty 53,000 on budget day?

Market Trend

Bulls remained cautious as the market approached the Union Budget scheduled for July 23. The Nifty 50 saw a lower high-lower low formation with negative momentum indicators on daily charts, although it defended 24,500 and the 21-day EMA on July 22. Experts see support at the 24,200-24,000 zone and resistance at 24,850-25,000, while for the Bank Nifty, breaking either side of the 52,000-52,800 range can give firm direction in the coming sessions.

On Monday, the Nifty 50 was down 22 points at 24,509, and the Bank Nifty gained 15 points at 52,280. On the NSE, 1,345 shares advanced, while 1,038 shares declined.

Nifty Outlook and Strategy

Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities

Technically, the Nifty had formed a Shooting Star candlestick pattern on the last weekly charts, which is a bearish reversal sign, and the momentum indicator MACD (Moving Average Convergence Divergence) has also gone into sell mode on the daily charts, thus confirming the same. Now, the weekly momentum is still in buy mode, so the index may slip into a range in this crucial budget week.

Historically, the range for the Nifty on Budget day is between +2 percent to -2 percent. At approximately 24,500 levels, the range for the index is 24,000 to 25,000 levels. Looking at the current week’s derivatives data, the maximum Call open interest is at the 25,000 level, whereas the maximum Put open interest is at the 24,000 level. Hence, the range is 24,000 to 25,000. The VWAP (volume weighted average price) is in the 24,350 to 24,400 range, which will act as short-term support, and the maximum pain is at 24,500, whereas modified maximum pain is at 24,667. Therefore, the resistance on the upside is approximately 24,700. Hence, the short-term range will be 24,350 to 24,700 within a broader range of 24,000 to 25,000 levels.

Key Resistance: 24,700, 25,000

Key Support: 24,350, 24,000

Strategy: Sell below 24,350, with a target of 24,000 and 23,800, and a stop-loss of 24,550.

Mehul Kothari, DVP – Technical Research at Anand Rathi

Going into the budget session, the markets could be highly volatile as the street seems to be sceptical about the steps that might be taken to curb retail participation in the markets. However, structure-wise, we don’t see any weakness at this point in time. Support for the session could be around 24,350 – 24,200 for the Nifty 50 in case of a positive budget, and the upside might resume above 24,600.

Key Resistance: 24,600, 25,000

Key Support: 24,350, 24,200

Strategy: Buy Nifty above 24,600, with a stop-loss of 24,400, and a target of 25,000.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

A decisive move below 24,500 on the Nifty 50 can lead to further weakness, potentially driving the index towards the 24,000-23,650 range, with intermediate support between 24,250-24,150. On the upside, the 24,800-25,000 range will act as a supply zone. A move above 25,000 could signal a continuation of the rally.

Key Resistance: 24,800, 25,000

Key Support: 24,200, 24,000, 23,650

Strategy: Consider buying on dips near 24,200, with a stop-loss at 23,650, and a target of 25,000.

Bank Nifty - Outlook and Positioning

Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities

Technically, the Bank Nifty has been consolidating within a range of 51,500 to 53,500 levels which is a downward sloping parallel channel, and the momentum indicator MACD has also gone into sell mode on the daily charts, thus indicating that the short-term trend is down. From the derivatives point of view, 52,000 strike Put has the highest open interest and below that 51,500 strike Put, whereas 52,500 strike Call and 53,000 strike Call has the highest open interest, hence the range is 51,500 to 53,000 levels. The short-term range is 52,000 to 53,000 levels. The Bank Nifty may surprise with a directional move as it has been outperforming the recent and this can lead to a strong breakout either side from hereon.

Key Resistance: 52,500, 53,000

Key Support: 52,000, 51,500

Strategy: Sell below 52,300, for a target of 52,000 and 51,500 levels, with a stop-loss of 52,550.

Mehul Kothari, DVP – Technical Research at Anand Rathi

The Bank Nifty has been stuck in a range of 52,800 – 51,800 for many sessions, and only a breakout or breakdown from this range would dictate the further trend. A fresh rally might commence above 52,800 in the upcoming session.

Key Resistance: 52,800, 53,500

Key Support: 51,800, 51,500

Strategy: Buy above 52,800, with a stop-loss at 52,200, and a target of 54,000.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

For the Bank Nifty index, there is immediate and crucial support at 52,000. A decisive move below this level can lead to further weakness towards the 51,000 mark. On the upside, the 52,800-53,000 range serves as a critical resistance zone. A breakout above this level could trigger a rally towards the 53,500-54,000 range.

Key Resistance: 53,000, 53,500, 54,000

Key Support: 52,000, 51,000

Strategy: Buy on dips near 52,000, with a stop-loss at 51,000, and a target of 54,000.

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