Trading Plan: Can Nifty sustain above 23,200, Bank Nifty hold 48,300?

Nifty Trading Plan

The Nifty 50 outperformed the Bank Nifty, rising two-tenths of a percent on January 23 with the continuation of its upward journey for the second consecutive session, but overall, it remained consolidative. The index almost tested the 10-day EMA (23,273) but could not sustain there on a closing basis. Hence, 23,300 may be the near-term resistance for the Nifty 50, followed by 23,400 as the next hurdle. However, falling below 23,200 could open doors for 23,000. Experts advised caution, considering both indices are trading below all key moving averages. If the banking index sustains below 49,000, a fall toward 48,300 and then 48,000 may be possible. However, if it rises above 49,000, a move toward 49,500–50,000 can’t be ruled out.

On Thursday, January 23, the Nifty 50 climbed 50 points to 23,205, whereas the Bank Nifty fell 135 points to 48,589. The market breadth was positive, with a total of 1,411 shares gaining, while 1,113 stocks saw corrections on the NSE.

Nifty Outlook and Strategy

Chandan Taparia, Head - Equity Derivatives & Technicals, Broking & Distribution at Motilal Oswal Financial Services

This week, the Nifty saw volatile moves after the previous week's relief rally. The index started the week on a positive note but faced intense selling pressure on Tuesday, breaking below the 23,000 level. Despite small recovery attempts during the week, the momentum at higher levels remained weak as the Nifty struggled to stay above the 23,333 zone. It formed a small-bodied bearish candle on the weekly frame with longer wicks. As long as it holds below the 23,333 zone, weakness could be seen toward the 23,000 and then 22,800 zones. Resistance is placed at 23,400 and 23,500 zones.

Key Resistance: 23,400, 23,500

Key Support: 23,000, 22,800

Strategy: Sell Nifty Futures on a bounce with a hurdle at 23,400 for downside targets toward 23,000/22,800 levels.

Hardik Matalia, Derivative Analyst at Choice Broking

On the daily chart, the Nifty index displayed follow-up buying after the previous session's bounce from lower levels but struggled to sustain higher levels. This pattern suggests that selling pressure persists at elevated levels, reflecting a lack of conviction among buyers. A breakdown below the immediate and crucial support at 23,000 could intensify selling pressure, potentially dragging the index toward the 22,800–22,500 range.

On the upside, immediate resistance is observed at 23,300, followed by a critical hurdle near 23,500. A sustained close above these resistance levels is essential to negate the prevailing bearish sentiment and confirm a bullish reversal. Until the index decisively trades above the 23,500 mark, a "sell on rise" approach is advised, as the current bounce lacks confirmation of strength. Traders should avoid overnight long positions and focus on managing risks effectively within this volatile market environment.

Key Resistance: 23,300, 23,500

Key Support: 23,000, 22,800

Strategy: Sell Nifty Futures on a rise near the 23,400 level for the target of 22,800–22,500 levels, keeping a stop-loss at 23,500 on a closing basis.

Kunal Kamble, Technical Research Analyst at Bonanza

The Nifty 50 futures have formed a falling wedge pattern, consolidating near the lower falling trendline at 23,480–23,020 levels. Despite this consolidation, the broader trend remains negative, reflecting cautious sentiment in the market. At lower levels, short positions are being covered, and with the upcoming expiry, further short covering may drive the index toward 23,500–23,750 levels.

However, this bounce should be viewed as a selling opportunity until the index decisively trades above 24,000, which remains a key resistance level. As long as it stays below this mark, the downside remains open, with potential targets at 23,000 and subsequently 22,800 levels. From an options perspective, the 23,000 strike Put holds the highest open interest (OI), signifying strong support. On the Call side, the 23,800 strike Call has the highest OI, indicating a strong resistance zone.

Key Resistance: 23,500, 23,800

Key Support: 23,000, 22,800

Strategy: Sell Nifty Futures on a rally near 23,750–23,800 levels with a stop-loss at 24,000 for a downside move toward 23,000–22,800 levels.

Bank Nifty - Outlook and Positioning

Chandan Taparia, Head - Equity Derivatives & Technicals, Broking & Distribution at Motilal Oswal Financial Services

The Bank Nifty remained consolidative for the entire trading session on Thursday. It formed a small-bodied candle on the daily scale, as the index is oscillating within a range of 1,500 points from the last few sessions. As long as it holds below the 49,000 zone, weakness could be seen toward 48,250 and then 47,750 levels, while on the upside, a hurdle is seen at 49,000 and then 49,250 zones.

Key Resistance: 49,500, 50,000

Key Support: 48,250, 47,750

Strategy: Sell Bank Nifty Futures on a bounce with a hurdle at 49,000 for downside targets toward 48,250/47,750 zones.

Hardik Matalia, Derivative Analyst at Choice Broking

The Bank Nifty index exhibited a largely sideways trend on the daily chart, with some buying emerging from lower levels. However, it struggled to sustain its momentum at higher levels. In the previous session, strong buying was observed toward the close. Although Thursday's session started with follow-through buying, the index failed to maintain its gains at higher levels, indicating persistent selling pressure. Additionally, the index continues to trade below its short-term (20-day), medium-term (50-day), and long-term (200-day) EMAs, emphasizing the need for a cautious approach.

Key support levels are placed at 48,300 and 48,000. A breakdown below these levels could trigger further selling pressure, dragging the index toward the 47,500 mark. On the upside, immediate resistance is seen at 48,900, with the next hurdle at 49,500. A sustained breakout above 49,500 is crucial to reverse the prevailing bearish trend and confirm a recovery. Traders are advised to closely watch these key levels, as price action around them will determine the index's next directional move. Implementing strict stop-loss measures and maintaining a cautious stance remains essential in this uncertain market environment.

Key Resistance: 48,900, 49,300

Key Support: 48,300, 48,000

Strategy: Sell Bank Nifty Futures on a rise near 49,300 for the target of 48,000–47,500 levels, keeping a stop-loss at 49,500 on a closing basis.

Kunal Kamble, Technical Research Analyst at Bonanza

Over the past eight days, the banking index has been consolidating in a tight range between 49,900 and 48,200 levels, reflecting indecision in the market. A decisive close below 48,000 will lead to a sharp decline, with immediate targets at 47,000 and subsequently 46,700 levels. The index is trading below its 50-day exponential moving average (DEMA), further affirming the bearish sentiment. Despite minor bounces, the overall structure remains weak, and any rallies should be utilized as selling opportunities. Until the index breaks above 49,950, the negative outlook persists.

Key Resistance: 48,000, 47,500

Key Support: 49,200, 49,900

Strategy: Sell Bank Nifty Futures on a rally near 49,500, with a stop-loss at 49,900 levels for a target of 48,700–48,000 levels.

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