Trading Plan: Can Nifty 50, Bank Nifty extend their downward move on RBI policy decision day?

Nifty Trading Plan on RBI policy decision day

The Nifty 50 and Bank Nifty closed in negative terrain on August 5, with continuation of the lower highs-lower lows formation. The momentum indicators showed a bearish trend. According to experts, if the Nifty 50 breaks 24,535 (last Friday’s low), the selling pressure may drag the index down toward 24,473 (a crucial support). However, on the higher side, 24,800 is expected to be the immediate resistance zone. Meanwhile, the Bank Nifty is likely to test the June low (55,149) as well as the 100-day EMA (54,900), considering the bears are in action mode. But in case of a rebound, 55,700–56,000 are the levels to watch.

On August 5, the Nifty 50 corrected 73 points to 24,650, while the Bank Nifty dropped 259 points to 55,360, with market breadth favouring declines. About 1,608 shares saw correction compared to 1,069 shares that attracted buying interest on the NSE.

Nifty Outlook and Strategy

Subash Gangadharan, Senior Technical Derivative Analyst at HDFC Securities

The Nifty remains in a short-term downtrend as it has been consistently making lower tops and lower bottoms for the last few weeks. There has also been a negative moving average crossover, as the 20-day SMA has moved below the 50-day SMA.

Momentum readings like the 14-day RSI are also in decline mode and not yet oversold, implying potential for more downsides.

We expect further downside once the immediate supports of 24,590–24,535 are broken. Downside targets in this scenario are 24,473 and 24,190. Our bearish view would be invalidated if the Nifty climbs higher and takes out the recent high of 24,785.

Key Resistance: 24,736, 24,785

Key Support: 24,535, 24,473

Strategy: Sell Nifty Futures between 24,649–24,700, with a stop-loss of 24,790, targeting 24,400–24,200.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

For the past five weeks, the Nifty has been consistently closing in the red on a weekly basis, for the first time since September 2024, which is a sign of weakness. This selloff is mainly driven by FII’s continuous selling and increased uncertainties surrounding the ongoing tariff war. Along with this, the Indian Rupee is getting weaker against the US Dollar, which is a negative sign for Indian markets.

Currently, prices are consolidating near their important support zone of 24,450 to 24,500, from which the Nifty has previously reversed five times. For a reversal to occur now, we need a daily close above the prior day’s high, with both a higher high and a higher low. Until that happens, we expect the Nifty to consolidate between 24,500–24,740 levels.

The overall tone remains in favour of the bears. A break above 24,740 could result in a short-term pullback. On the other hand, a break below 24,590 could lead to a move toward the support area of 24,450–24,500.

Key Resistance: 24,740

Key Support: 24,450

Strategy: Short positions can be created below 24,590, with 24,670 as the stop-loss and a target of 24,450.

Preeti K Chabra, Founder of Trade Delta

Ahead of the upcoming RBI policy announcement on Wednesday, the Nifty index remains in consolidation and has formed a Narrow Range 3 (NR3) pattern on the daily chart, indicating a potential breakout in either direction. The RSI is currently at 40 and trending below its signal line, hinting at underlying bearish momentum. On the derivatives front, unwinding of in-the-money (ITM) Put positions signals cautious sentiment and potential downside pressure.

However, with the RBI policy decision and concerns around possible additional tariffs on India, directional clarity is likely to emerge as events unfold. Traders are advised to remain cautious and maintain limited position sizing in the interim.

Key Resistance: 24,945

Key Support: 24,473

Strategy: In a bullish scenario, go long on Nifty Futures if the cash index breaks above 24,733 for a target of 24,945, with a stop-loss of 24,700. In a bearish scenario, go short on Nifty Futures if the cash index falls below 24,590 for a target of 24,473, with a stop-loss of 24,650.

Bank Nifty - Outlook and Positioning

Subash Gangadharan, Senior Technical Derivative Analyst at HDFC Securities

Bank Nifty is also in a downtrend, as the index has been making lower tops and lower bottoms for the last few weeks. With the index trading below key moving averages and momentum indicators like the 14-day RSI in decline mode and not oversold, the index could fall further.

Key Resistance: 55,760, 56,100

Key Support: 55,202, 54,500

Strategy: Sell Bank Nifty at the current market price, with a stop-loss of 55,760, targeting 54,500.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

Indian markets remained under pressure following Trump’s latest threat to hike tariffs on India over its Russian oil imports. In the previous session, the Bank Nifty fell by more than 440 points from the day’s high and also closed below the important support zone of 55,400–55,500, which is a negative sign.

In July, after making fresh highs near 57,628, the Bank Nifty has fallen by more than 4% in just one month, and prices have retraced 23.6% of the entire prior rally, which started in March 2025. In this correction, private banks were the major contributors.

The Bank Nifty trend continues to remain a sell on rise, which opens the door for targets of 55,150, followed by 54,700. On the upside, 55,700 is an immediate resistance.

Key Resistance: 55,700

Key Support: 54,700

Strategy: Short positions can be created if Bank Nifty moves towards 55,520 and breaks below 55,370, with targets of 55,150, followed by 55,000, and a stop-loss of 55,590.

Preeti K Chabra, Founder of Trade Delta

The Bank Nifty index has formed a bearish candle and continues to trade within a downward-sloping channel, suggesting bearish momentum. However, it is worth noting that the index is hovering near the lower band of the Bollinger Bands, indicating proximity to slightly oversold territory.

The RSI is at 35.75 and remains below its signal line, indicating continued bearish momentum, though historically, the index has seen rebounds from similar RSI levels.

On the derivatives front, slight unwinding of in-the-money (ITM) Puts reflects a mild downside bias but limited conviction.

Given the upcoming policy event and concerns over potential additional tariffs on India, a clear directional move is likely once these developments unfold. Traders are advised to remain cautious, with a focus on disciplined risk management and conservative position sizing.

Key Resistance: 55,650, 56,000

Key Support: 55,165, 54,600

Strategy: Buy Bank Nifty Futures above the cash price of 55,650 for a target of 56,000, with a stop-loss of 55,450. Or sell Bank Nifty Futures below the cash price of 55,165 for a target of 54,600, with a stop-loss of 55,360.