Trading Plan: Can Nifty 50, Bank Nifty manage to rebound amid rangebound trading?

Nifty Trading Plan for July 18

The Nifty 50 and Bank Nifty were caught in selling pressure on July 17. Given the bearish technical indicators, and as long as the Nifty 50 trades below 25,250, consolidation and range-bound trading may continue, with immediate support at 25,000, followed by 24,900. However, in case of a bounce, it may face a strong hurdle at the 20-DEMA (25,250), as a sustained close above it can drive the index toward 25,400. Meanwhile, the Bank Nifty has been in the range of 56,600–57,400. If the banking index decisively breaks the 56,600 support zone, the selling pressure may extend up to 56,300. But as long as the index stays above it, an attempt toward 57,300–57,400 is likely, experts said.

On July 17, the Nifty 50 dropped 101 points to 25,111, while the Bank Nifty slipped 340 points to 56,829, with slightly negative market breadth. About 1,393 shares were down compared to 1,261 shares that gained on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

Nifty continued its range-bound trajectory, stuck between 25,000 and 25,350 for the fourth consecutive session, reflecting a tug-of-war between bulls and bears. The index’s failure to sustain gains at higher levels, along with its position below the 10- and 20-day EMAs near 25,250, indicates persistent selling pressure. The zone of 25,250–25,330 remains a key resistance, while 25,000 holds as crucial support. RSI hovering near 50 signals a lack of momentum, affirming the sideways phase.

Derivatives data shows aggressive Call writing at 25,200, while cautious Put writing at 25,000 indicates limited upside conviction. The Put-Call Ratio (PCR) has dropped to 0.69, suggesting a bearish undertone.

Despite low India VIX near 11.24 hinting at consolidation over panic, FPI positioning remains heavily short, with the long-short ratio below 20%. Until a breakout above 25,350 occurs, adopting a “sell on rise” strategy remains prudent in the current market setup.

Key Resistance: 25,350, 25,500, 25,700

Key Support Levels: 25,000, 24,850, 24,700

Strategy: Traders can execute a Bear Call Spread strategy for the July 24 expiry by buying one lot of 25,150 CE at Rs 131 and selling one lot of 24,950 CE at Rs 255. 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 5,640. Target: Hold the strategy until expiry to achieve a maximum profit of Rs 9,360, or consider booking profits once the MTM gains exceed Rs 6,000.

Jay Mehta, Technical Analyst at JM Financial Services

The Nifty index recently exhibited a bearish engulfing formation at the upper Bollinger Band on June 30, followed by a decline below the 20-day EMA with a gap-down opening on July 11. Despite three unsuccessful attempts to recapture the 20-day EMA this week, the index continues to face resistance, struggling to restore bullish momentum.

The Relative Strength Index (RSI, 14) trades just below the 50 midpoint with a bearish crossover, while the Moving Average Convergence Divergence (MACD) also shows a bearish crossover with the signal line, indicating diminishing bullish vigor. The near-term outlook is sideways to mildly bearish. Unless the bearish gap from July 11 is filled, Nifty could potentially test lower support levels at 24,930 (weak), 24,800, and 24,500 once the psychological support at the 25,000 mark is breached. On the upside, the immediate resistance zone lies at 25,250–25,300, with a subsequent barrier at 25,350–25,398.

Key Resistance: 25,250, 25,300, 25,350, 25,398

Key Support: 24,930, 24,800, 24,500

Strategy: Implement a sell-on-rally tactic until the resistance zone is decisively breached. A conservative approach is to consider initiating short positions if the 25,000 level is violated on the downside. For intraday bullish opportunities, monitor price action near 24,920–24,930, where support may form at the confluence of the 50-day EMA, the lower Bollinger Band, and an ascending trendline. Enter long positions with a tight stop-loss set below 24,890 and target 25,000 and 25,050.

Hardik Matalia, Derivative Analyst at Choice Broking

The Nifty 50 slipped lower to close just above the 25,100 mark on a negative note. On the downside, a breach below the 25,000 level could trigger further selling pressure, dragging the index toward the 24,900–24,700 zones. On the upside, 25,250 remains the immediate resistance, while a strong supply zone is placed around 25,400–25,500.

A decisive breakout above this resistance range is essential to confirm fresh buying interest. Until then, a sell-on-rise approach is advisable, with traders staying cautious and maintaining strict stop-losses amid ongoing market volatility.

Key Resistance: 25,250, 25,400

Key Support: 25,000, 24,900

Strategy: Sell on rise near 25,400 levels for a target of 24,900–24,700 levels, with a stop-loss of 25,500 on a closing basis.

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Nifty Bank index continues to trade sideways, trapped within a narrow 56,600–57,350 range for the past four sessions, reflecting strong indecisiveness and a tug-of-war between bulls and bears. Despite occasional intraday rebounds, the index faces repeated rejection near a downward-sloping trendline, limiting upward momentum.

The index continues to hover around its 20-day EMA but lacks strong follow-through buying. The 57,250–57,350 zone acts as a significant supply barrier, while support remains firm near 56,600. The Relative Strength Index (RSI) around 50 highlights the absence of a clear directional bias.

Derivatives data shows strong Call writing at the 57,000 strike, while cautious Put writing and moderate support at 56,500 indicate limited upside conviction. The drop in Put-Call Ratio to 0.78 reflects rising bearish sentiment.

With the earnings season ahead, a breakout may emerge, but until the index breaches 57,350, adopting a “sell on rise” approach remains prudent in the current market scenario.

Key Resistance: 57,350, 57,500, 57,750

Key Support: 56,750, 56,500, 56,300

Strategy: Traders can consider selling Nifty Bank July Futures if the price crosses above 56,950–56,900, setting a stop-loss above 57,200. Profit-taking can be considered once the index reaches 56,550–56,500.

Jay Mehta, Technical Analyst at JM Financial Services

Bank Nifty maintains a medium-term bullish trend, characterized by a sequence of higher highs and higher lows. However, the daily chart reveals negative divergence on the RSI, with lower highs and a bearish crossover, suggesting underlying weakness. The bearish candlestick patterns—such as a bearish engulfing on April 23, a Bearish Belt Hold on June 9, and another engulfing on July 2—indicate rejection at elevated levels.

A bullish confirmation necessitates the RSI breaking above 68 and the price surpassing 57,630. The medium-to-long-term perspective remains optimistic, but the short-term outlook is mildly bearish to neutral. A breakout above 57,630 could propel the index toward the 58,000–58,220 resistance cluster, whereas a failure may result in consolidation or a retreat to supports at 56,630, 56,000, or lower.

Key Resistance: 57,370, 57,630

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

Strategy: For a conservative long approach, await a breakout above 57,630, confirmed by an RSI rise above 68, before entering long positions. For a bearish setup, watch for a breakdown below 56,590, targeting supports at 56,300 and 56,000, with a stop-loss positioned above 57,370.

Hardik Matalia, Derivative Analyst at Choice Broking

The Bank Nifty index witnessed rejection at higher levels and formed a strong bearish candlestick on the daily chart, signaling a potential shift in momentum and short-term weakness. The index is currently hovering slightly above its 20-day EMA (around 56,800). A sustained breach below this level may lead to extended selling pressure, pushing the index toward the 56,500–56,300 support zones.

On the upside, 57,000 acts as immediate resistance, followed by a strong hurdle near the 57,300–57,500 zone. A decisive breakout above 57,500 is essential for the bullish momentum to resume. Until then, a sell-on-rise approach remains advisable as long as the index trades below the 57,300 mark. Traders should stay cautious and manage positions with strict stop-losses amid the prevailing volatility.

Key Resistance: 57,000, 57,300

Key Support: 56,500, 56,300

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