Trading Plan: Can Nifty 50 extend gains for eighth consecutive session, outperform Bank Nifty?

Nifty Trading Plan

The Nifty 50 extended its gains for the seventh straight session on March 25, closing off the day’s high. This may be due to profit booking after the consistent run-up since last week. Overall, experts remain bullish on the market and are not worried about intermittent consolidation, expecting the Nifty 50 to march toward the 24,000-24,200 zone if it decisively closes above 23,800, the crucial hurdle. Support is placed at the 23,500-23,400 area. Meanwhile, the Bank Nifty needs to sustain above 52,000 for a further rally toward the 52,500-52,800 zones; until then, it may consolidate with the crucial support of 50,800.

On Tuesday, March 25, the Nifty 50 closed off the day's high, rising by 10.3 points to 23,669, while the Bank Nifty fell by 97 points to 51,608. The market breadth turned negative, with 2,078 shares facing selling pressure against 554 advancing shares on the NSE.

Nifty Outlook and Strategy

Nandish Shah, Senior Technical and Derivative Analyst at HDFC Securities

The Nifty rose for the seventh consecutive session. Following a recovery of more than 1,900 points from the swing low of 21,964, the Nifty appears to have entered a profit-booking phase. Nevertheless, the overall trend of the index remains bullish, and on the downside, 23,400 should provide support, the level at which we have seen Put writing. On the upside, 23,869 is expected to serve as short-term resistance, above which resistance can be seen at 24,125. Therefore, our advice would be to adopt a buy-on-dips strategy with a stop-loss at 23,200. Immediate resistance is placed around the 23,800 levels, where multiple tops are located. Any close above 23,800 would result in further short covering, potentially pushing the Nifty to 24,100-24,200 levels.

Key Resistance: 23,850, 24,125

Key Support: 23,400, 23,200

Strategy: Buy Nifty Futures around 23,400, with a stop-loss at 23,200, targeting 23,850 and 24,125 (cash levels).

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

The Nifty has been moving in gaps and continued its rally. In the previous week, the Nifty formed the largest positive weekly candle since the entire fall from October 2024. In the previous session, prices managed to show profit booking after reaching near 23,860 levels. The sharp rise has taken a pause, and we now expect a broad range-bound movement between the 23,860 - 23,480 zone. A break of this zone could provide a short-term trading opportunity in that direction. Also, unless prices close back below the low of the prior day, it is better to use dips as a buying opportunity.

As per Elliott Wave theory, the recent rise has now surpassed the prior fall in faster time, confirming a major trend reversal to the upside. However, short-term profit booking is possible, given the sharp rise in the past few days. In summary, volatility can be high but within a range for now. Expect prices to move between 23,480 - 23,860; any breach above 23,860 will resume the positive trend to 24,150 levels, which is where wave 3 will be 2.618* wave 1.

Key Resistance: 23,950

Key Support: 23,480

Strategy: Long positions can be created in Nifty Futures above 23,750, with a stop-loss at 23,650 and a target of 23,860 followed by 23,950.

Preeti K Chabra, Founder of Trade Delta

The Nifty index has been making higher highs and higher lows for the last 6 trading days and has added 318 points (1.36%) in the current week. Last week, the Nifty index added 953 points on a weekly chart, a whopping 4.26%, marking the biggest weekly gain since the first week of February 2021. It is now comfortably trading above the downward-sloping channel connecting the all-time high of 26,277 on September 27, and on Tuesday, it closed above the Fibonacci level of 23,666. On an intraday basis, it traded above the Fibonacci level of 23,777 and touched an intraday high of 23,869 but gave away gains and closed at 23,668 with the formation of a bearish candle.

The RSI on the daily chart is trading at 71.65, which is in the overbought zone, and on the Bollinger Band, the Nifty is trading above the upper end of the band at 23,557, both suggesting an expected reversal. In the weekly options chain, we see significant unwinding happening in the in-the-money (ITM) Calls, suggesting a bullish trend. Overall, the market's texture is positive, and any dip provides an opportunity to enter into long positions. However, to take advantage of the reversal that can come from overbought indicators, we advise traders to use a Bearish Put Butterfly spread.

Key Resistance: 23,850, 24,000

Key Support: 23,450, 23,189

Strategy: Traders can use a Bear Put Butterfly spread strategy. This strategy is employed when traders expect the price of an underlying asset to decrease in the future. It involves buying a Put option at a higher strike, selling 2 Put options at the middle strike, and buying 1 Put option at a lower strike. This strategy has the benefit of limited risk, high profit potential, and relatively low upfront cost.

Bank Nifty - Outlook and Positioning

Nandish Shah, Senior Technical and Derivative Analyst at HDFC Securities

The Bank Nifty broke its eight-day winning streak. The short-term trend remains bullish, as the Bank Nifty is placed above its 5, 11, and 20-day EMA. During the last week, the Bank Nifty broke out from the downward-sloping trendline joining the highs of December 16, 2024, and February 7, 2025. Momentum indicators are showing strength in the current up move. In the options market, we have seen aggressive Put writing at the 50,500-51,000 levels. Therefore, our advice would be to adopt a buy-on-dips strategy with a stop-loss at 50,500 levels. Above 52,000 levels, the Bank Nifty is likely to test the next resistance at 52,800 and 53,500 levels.

Key Resistance: 52,000, 52,800

Key Support: 51,000, 50,500

Strategy: Buy Bank Nifty Futures around 51,000, with a stop-loss at 50,200, targeting 52,000 and 52,800.

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

Recently, the Bank Nifty has given a breakout of the Double Bottom pattern on the daily chart. After reversing from the important support near 47,800, the index saw a V-shaped recovery of more than 4,000 points in a short span of time. Also, during this rally, which started from March 12, not a single candle has closed below the prior day's low, highlighting the strength of the ongoing trend.

In the previous sessions, we saw profit booking after a sharp rally, and prices closed in the red for the first time after 6 consecutive winning sessions. However, prices still managed to protect the prior day's low on a closing basis, which keeps the overall trend positive. In summary, the trend for Bank Nifty remains positive. A breach below 51,400 could extend the profit booking towards 50,800. A breach below 50,800 will be a cause for concern. On the other hand, a break above 51,850 is crucial for the buying trend to resume, with targets of 52,500.

Key Resistance: 52,500

Key Support: 50,800

Strategy: Long positions in Bank Nifty Futures can be created above 51,850 with a stop-loss at 51,400 and targets of 52,300 followed by 52,500.

Preeti K Chabra, Founder of Trade Delta

The Bank Nifty closed negative on Tuesday, forming a bearish candle with minor upper and lower shadows, indicating volatility after eight consecutive positive closes. It is making higher highs and higher lows in the last 9 trading days, and on Tuesday, it closed at 51,607, above the important Fibonacci retracement level of 61.8% at 51,272. This week, the Bank Nifty added 2%, and last week, it added a whopping 5.27%, showcasing the strength of the bulls over the bears and a shift in sentiment from negative to positive.

In the monthly options chain, we see significant unwinding happening in the in-the-money (ITM) calls, suggesting bullish momentum. Overall, the texture of the index is positive, and we expect further upside in the Bank Nifty. However, we advise traders to adopt a buy-on-dips strategy and allow the index to retrace before taking fresh long positions.

Key Resistance: 52,000, 52,500

Key Support: 51,272, 50,800

Strategy: Buy Bank Nifty Futures near the cash price of 51,300, targeting 52,000 with a strict stop-loss at a closing price below 51,000.