Trading Plan: Can Nifty 50 sustain above 24,700, Bank Nifty hold previous day’s low?

Nifty Trading Plan on August 5

The Nifty 50 started the week on a positive note, outperforming the Bank Nifty, which closed flat on August 4. However, the sustainability of this Nifty 50 uptrend is important to watch in the upcoming sessions. The index is most likely to trade in the 24,500–25,000 range, as a decisive break of this range on either side can provide a firm direction to the market. The key support is placed at 24,473 (June low), as a breach below this level may give more power to the bears. Meanwhile, the Bank Nifty needs to hold its previous day’s low (55,437) for an upward move toward the 56,100–56,200 zone. If it fails, the 55,149 level (June low) can't be ruled out, according to experts.

On August 4, the Nifty 50 jumped 157 points to 24,723, while the Bank Nifty rose 1.8 points to 55,619, with positive market breadth. About 1,659 shares advanced compared to 1,058 shares that declined on the NSE.

Nifty Outlook and Strategy

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

With the last negative weekly close, the Nifty 50 ended in negative territory for five consecutive weeks. It has been observed that after five consecutive negative closes, the index generally finishes the sixth week in positive territory. This pattern has been seen since the inception of the Nifty, with only two exceptions in the past—2001 and 2008—both of which were bear markets. Assuming the current downtrend is not part of a bear market, the probability of upside in the sixth week is higher.

On the downside, the 24,500 to 24,450 range is a crucial support zone, whereas 25,000 is an immediate target and also a previous swing resistance. The net long percentage of FIIs is below 9%, one of the lowest levels, indicating an oversold condition, which could signal a trend reversal if there is a positive surprise.

Looking at the options data, there was significant Put addition in the last trading session from 24,700 to 24,500 strikes, along with significant Call unwinding from 24,500 to 24,800 strikes. The IVs (implied volatility) continue to remain at the lower end of the range, which is a near-term concern. Therefore, any bounce should be seen as temporary rather than the beginning of a new uptrend, unless proven otherwise.

Key Resistance: 25,000, 25,200

Key Support: 24,600, 24,450

Strategy: Buy Nifty Futures at 24,722 (spot levels) and on dips near 24,650, with a stop-loss of 24,450, targeting 25,000 and 25,200.

Mehul Kothari, Deputy Vice President - Technical Research, Anand Rathi Shares and Stock Brokers

Technically, a bullish Alternate Bat harmonic pattern has formed on the daily chart around the 24,500–24,600 zone, making the area an attractive support region. Additionally, a bullish divergence on the hourly RSI suggests further upside potential. Given these signals, the Nifty 50 may head toward the 25,000 level in the next 2–3 sessions. Moreover, with the long-short ratio at just 9% as of August 1, short-covering could further fuel the rally.

Key Resistance: 24,900, 25,000

Key Support: 24,600, 24,500

Strategy: Buy Nifty Futures in the 24,750–24,800 zone, with a stop-loss of 24,550, targeting 25,100.

Shitij Gandhi, Senior Research Analyst (Technicals) at SMC Global Securities

Technically, the Nifty could face a strong hurdle in the 24,800–24,850 zone, while major support is placed at the 24,600 level. Until the index trades above 24,850, consolidation may continue within the 24,800 to 24,600 range. However, if it breaks below, then 24,400 is the level to watch. Going forward, any development related to the outcome of tariff negotiations would dictate the further course of action.

Key Resistance: 24,800, 24,850

Key Support: 24,650, 24,600

Strategy: Sell Nifty Futures on rallies near 24,850, with a stop-loss above 25,000, targeting 24,600.

Bank Nifty - Outlook and Positioning

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

The Bank Nifty was relatively weaker than the Nifty 50. Nifty’s upside was supported by almost all sectors except Nifty Bank and Nifty FMCG. However, the Bank Nifty has support near the 55,000 level and resistance near 57,000, forming a broad range of 2,000 points.

Options data indicates that the 55,000 to 55,500 level is a critical support range. As long as this range holds, the short-term trend will remain sideways to positive, with the index possibly bouncing back from oversold territory. Put additions were seen at 55,500 and 55,600 strikes, which will act as supports. However, Call writing was relatively more prominent and observed from 55,600 to 56,500 strikes. Therefore, above 55,600, bulls may gain the upper hand. Until then, the Bank Nifty may trade sideways. However, if Nifty is expected to bounce, Bank Nifty may also rebound.

Key Resistance: 56,500, 57,000

Key Support: 55,000, 54,500

Strategy: Buy Bank Nifty Futures at CMP of 55,619 (spot levels) and on dips near 55,000, with a stop-loss of 54,500, targeting 56,500 and 57,000.

Mehul Kothari, Deputy Vice President - Technical Research, Anand Rathi Shares and Stock Brokers

Despite muted price action, the technical setup of the Bank Nifty remains encouraging. A bullish Bat harmonic pattern has emerged on the daily chart near the 55,600–55,500 zone, marking it as a strong support area. Supporting this view, a bullish divergence is visible on the hourly RSI, indicating the potential for a near-term reversal. Based on these factors, the Bank Nifty could move toward the 56,200 level in the next 2–3 sessions, provided support levels hold firm.

Key Resistance: 56,300, 56,400

Key Support: 55,500, 55,400

Strategy: Buy Bank Nifty Futures in the 55,800–55,900 zone, with a stop-loss of 55,500, targeting 56,400.

Shitij Gandhi, Senior Research Analyst (Technicals) at SMC Global Securities

The Bank Nifty also witnessed some see-saw moves during Monday's session but managed to close in positive territory. Technically, the index is holding within a bearish channel with the formation of a lower-bottom pattern on daily charts. At the current juncture, the banking index is trading near its crucial support zone of 55,500–55,000. The bias is likely to remain in favour of bears as the index continues to trade below the 56,500 level, where bears seem to have control.

Key Resistance: 56,200, 56,500

Key Support: 55,500, 55,000

Strategy: Sell Bank Nifty Futures on a rise near 56,300, with a stop-loss above 56,800, targeting 55,500.

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.