Trading Plan: Can bears drag Nifty 50 toward 25,200, Bank Nifty near previous week's low?

NIfty Trading Plan for July 11

The Nifty 50 and Bank Nifty fell half a percent each on July 10, with long bearish candle formations on the daily charts and negative crossovers in momentum indicators, suggesting further consolidation with a negative bias in the upcoming sessions. If the Nifty 50 breaks the key support zone of 25,300–25,200, the fall may extend toward the 25,000 zone, however, on the higher side, the 25,500 is the level to watch. Meanwhile, the Bank Nifty needs to defend 56,600 (previous week’s low as well as the 20-day SMA) for a rebound toward the 57,300–57,400 zone. Falling below this level could open the door to 56,500–56,300 levels, experts said.

On July 10, the Nifty 50 dropped 121 points to finish at 25,355 (the lowest closing level since June 25), while the Bank Nifty closed below the 57,000 mark at 56,956, down 258 points. Market breadth remained favourable for bears, as about 1,443 shares came under bear control compared to 1,196 shares that were backed by bulls on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Nifty index remained under selling pressure, closing below the previous three sessions’ lows, signaling sustained bearish sentiment. Broader indices, except microcaps, ended in the red, with muted volumes reflecting weak participation. Technically, a swing high near 25,550 has emerged as a key resistance zone, while the index trades between its 10- and 20-day EMAs, highlighting indecision. The 25,300–25,600 range continues to act as a consolidation zone, with no clear breakout in sight.

Derivatives data indicate caution, with strong Call writing at the 25,500 strike and restrained Put writing near current levels, hinting at limited bullish confidence. The Put-Call Ratio stands at 0.69, emphasizing a bearish tilt.

Foreign Portfolio Investors (FPIs) are steadily building short positions in index futures, adding to the cautious undertone. Until the index breaks above key resistance or short covering emerges, momentum is likely to stay subdued. The onset of the earnings season will be crucial in steering market sentiment ahead.

Key Resistance: 25,550, 25,750, 25,900

Key Support: 25,300, 25,150, 25,000

Strategy: Traders can execute a Bear Call Spread strategy for the July 17 expiry by buying one lot of the 25,400 Call at Rs 127 and selling one lot of the 25,200 Call at Rs 249. This setup is designed to capitalize on a potential downside move while limiting upside risk.

Stop Loss: Hold the strategy until expiry, with the maximum mark-to-market (MTM) loss capped at Rs 5,861.
Target: Hold the strategy until expiry to achieve a maximum profit of Rs 9,139, or consider booking profits once MTM gains exceed Rs 6,000.

Jay Mehta, Technical Research at JM Financial Services

The Nifty 50 is consolidating within a range after forming a bearish engulfing candlestick at the upper Bollinger Band on June 30, indicating potential exhaustion at higher levels. The range is defined by support at 25,200 and resistance at 25,670. Until a breakout occurs on either side, the Nifty is likely to remain rangebound. The 20-day EMA is placed at 25,284, which could provide dynamic support. The momentum indicator remains in bullish territory but with a negative crossover, suggesting more consolidation within the confined range.

A breakout above resistance (25,670) could drive the Nifty toward 25,800 and 26,000, while a breach below support (25,200) may lead to a decline toward 25,000–24,700.

Key Resistance: 25,550, 25,670

Key Support: 25,300, 25,200, 25,000

Strategy:

Range Trading: Buy Nifty Futures near the lower end of the range (25,200) with a stop-loss at 25,000, and sell near the resistance levels of 25,550 or 25,670 for short-term opportunities.
Breakout Trading: Await a decisive breakout above 25,670 for a bullish continuation targeting 25,800 and 26,000, or a breakdown below 25,250 for a bearish move toward 25,000–24,700.

Hardik Matalia, Derivative Analyst at Choice Broking

The Nifty index is currently hovering near the 0.382 Fibonacci retracement level, which also coincides with the previous swing low and a critical support zone around 25,330–25,300. A breakdown below this zone could lead to extended selling pressure, potentially dragging the index toward the 25,100–25,000 levels.

On the upside, immediate resistance is seen near 25,500, followed by a strong hurdle around 25,600. As long as the index trades below these levels, selling pressure may persist. In the current scenario, a sell-on-rise strategy is advisable, and traders should maintain strict stop-losses amid prevailing market volatility.

Key Resistance: 25,500, 25,600

Key Support: 25,300, 25,100

Strategy: Sell Nifty Futures on a rise near 25,500 levels for a target of 25,100–25,000, with a stop-loss at 25,600 on a closing basis.

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

Bank Nifty extended its weakness, failing to rebound from lower levels amid subdued volumes, indicating lacklustre market participation. The index continues to face stiff resistance around the 57,350 mark, where repeated selling has kept upside moves in check.

It remains stuck within a narrow 500-point range of 56,800–57,300, with prices hovering between the 10- and 20-day exponential moving averages, highlighting indecision.

Momentum indicators, with the Relative Strength Index (RSI) slipping below the 60 mark, point to fading strength. A breakout above 57,300 is essential for any bullish confirmation, while a close below 56,770 could open the door to further downside.

In the derivatives segment, Call writers remain active at the 57,000 strike, signaling continued supply pressure. Meanwhile, Put writing remains limited, showing hesitancy among participants to bet on a strong recovery. Until a directional breakout occurs, the index is likely to remain in consolidation mode.

Key Resistance: 57,300, 57,700, 57,950

Key Support: 56,700, 56,500, 56,300

Strategy: Traders can consider selling Nifty Bank July Futures if the price crosses below 57,150–57,100, setting a stop-loss above 57,350. Profit-taking can be considered once the index reaches 56,700–56,600.

Jay Mehta, Technical Research at JM Financial Services

Bank Nifty is exhibiting a pattern of higher highs and higher lows, reflecting a medium-term bullish trend. However, the RSI on the daily chart shows a negative divergence, forming lower highs with a negative crossover, which indicates underlying weakness. Bearish candlestick patterns have consistently appeared at recent highs, suggesting rejection at higher levels and reinforcing short-term caution. For a bullish confirmation, the RSI needs to break above 68, and the price must surpass 57,630.

The medium- to long-term bias remains positive, but the short-term outlook is sideways to mildly bearish until the RSI breaks above 68 and the price clears the 57,630 resistance. Failure to do so may lead to consolidation or a pullback toward key support levels.

Key Resistance: 57,630, 58,000, 58,220

Key Support: 56,630, 56,000, 55,400

Strategy:
Bullish Setup: Wait for a breakout above 57,630 with RSI above 68 to confirm bullish momentum before entering long positions.Bearish Setup: Monitor for a breakdown below 56,630 for potential short-term short opportunities targeting 56,000 or 55,400.

Hardik Matalia, Derivative Analyst at Choice Broking

The Bank Nifty index witnessed rejection at higher levels and formed a strong Bearish Engulfing candlestick pattern on the daily chart, indicating a possible shift in momentum and suggesting short-term weakness. This pattern reflects selling pressure emerging after the recent rally. On the downside, immediate support is placed in the 56,700–56,500 zone. A breach below this range could trigger extended selling pressure, potentially dragging the index toward the 56,000 mark—a crucial level for the ongoing bullish structure.

On the upside, immediate resistance is seen near 57,000, followed by a strong hurdle around 57,300–57,500. As long as the index remains below the 57,500 mark, a sell-on-rise strategy is advised. Traders are encouraged to stay cautious and manage positions with strict stop-losses, especially in light of heightened short-term volatility.

Key Resistance: 57,000, 57,300

Key Support: 56,700, 56,500

Strategy: Sell Bank Nifty Futures on a rise near 57,300 levels for a target of 56,500–56,000, with a stop-loss at 57,500 on a closing basis.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.