Trading Plan: Will Bank Nifty continue to outperform benchmark Nifty 50?

Nifty Trading Plan

The market sustained its upward journey for the sixth consecutive session on August 22, with the Nifty closing above the 24,800 level for the first time in the last three weeks. The index is likely to inch towards the 24,900-25,000 zone in the coming sessions, but intermittent consolidation can't be ruled out, with 24,700-24,600 acting as immediate support. The Bank Nifty needs to sustain above 50,800 for a move towards 51,300-51,500, while support lies at 50,500, according to experts.

On Thursday, the Nifty 50 rose 41 points to 24,812, and the Bank Nifty jumped 300 points to 50,986. On the NSE, about 1,460 shares advanced, while 918 shares declined.

Nifty Outlook and Strategy

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

The Nifty index continued its formation of higher highs and higher lows over the last five trading sessions, but the pace of momentum is lacking at higher levels. It witnessed a decent recovery in the last two weeks, and the index is set to scale new lifetime highs. It formed a bullish candle on the weekly scale but a bearish candle on the daily scale as it closed lower than its opening level. Now, it needs to continue holding above the 24,700 zone to extend the move towards 25,000 and 25,100 zones, with supports placed at 24,700 and then 24,550.

India VIX has been falling for the last six trading sessions, recently correcting from 23 to 13 zones, indicating dominance by bulls in the market. Option data suggests a broader trading range between 24,500 and 25,100 zones.

Key Resistance: 25,000, 25,100

Key Support: 24,700, 24,550

Strategy: Buy on declines with support at 24,550 for a target of 25,100.

Deven Mehata, Equity Research Analyst at Choice Broking

On the downside, 24,550 serves as a robust support level. On the higher side, resistance near the 25,000 level is expected. Investors should monitor these support and resistance levels closely for further market cues. A strong closing above the 25,000 level will indicate underlying bullish sentiment, suggesting the possibility of continued upward movement in the near term.

Key Resistance: 24,950, 25,000

Key Support: 24,550, 24,500

Strategy: Buy on dips near the 24,600 level for a target of 24,950 and 25,000 levels, with a stop-loss of 24,550 on a closing basis.

Drumil Vithlani, Technical Research Analyst at Bonanza Portfolio

The market is expected to challenge another resistance zone at the 25,000 mark. It has been holding well above its 50-day EMA (Exponential Moving Average) support level for 12 sessions in a row, with the support rising alongside the trend. The immediate support level is placed at 24,750, followed by 24,500. If these support levels are breached, the index may see a change in trend, while upside momentum is expected to continue towards 25,000. Options data indicates an immediate range of 24,500-25,000.

Key Resistance: 25,000, 25,200

Key Support: 24,750, 24,500

Strategy: Sell 1 lot of the 24,700 strike Put and buy 1 lot of the 24,500 strike Put of August expiry.

Bank Nifty - Outlook and Positioning

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

Bank Nifty negated the formation of lower highs on the weekly scale and bottomed out with support at the 49,650 zone by forming a Double Bottom pattern on the daily scale. It managed to reclaim its 50 DEMA and achieved the highest daily close in the last 13 trading sessions. It formed a bullish candle on both the daily and weekly scales and is set to surpass its falling supply trendline, potentially triggering a short-covering spike. Now, it needs to hold above the 50,850 zone for an up move towards 51,250 and 51,500 zones, while on the downside, support is placed at 50,500 and then 50,250 levels.

Key Resistance: 51,250, 51,500

Key Support: 50,500, 50,250

Strategy: Buy on declines with support at 50,500 for a target towards the 51,500 zone.

Deven Mehata, Equity Research Analyst at Choice Broking

On the lower side, Bank Nifty has strong support near the 50,750 level, which is also close to its 20 and 50-day EMA levels. On the higher side, the index has resistance near the 51,300-51,500 levels. Once Bank Nifty sustains above the mentioned level of 51,500, a strong up move towards the 52,000 level is possible. The overall chart structure looks positive after Thursday's closing above the 50,750 level. Traders are advised to trade with a strict stop-loss and should book quick profits near the resistance of 51,300-51,500 levels.

Key Resistance: 51,300, 51,500

Key Support: 50,750, 50,600

Strategy: Buy on dips near the 50,750 level for a target of 51,300-51,500 levels, with a stop-loss of 50,600 on a closing basis.

Drumil Vithlani, Technical Research Analyst at Bonanza Portfolio

Derivatives data and technical charts suggest rangebound price action for the Bank Nifty with a positive bias. Daily momentum indicators have seen a positive crossover, indicating bulls have overpowered bears. Going forward, the trailing stop-loss for long positions should now be trailed to 50,500, the support level, and intraday dips should be viewed as buying opportunities. On the options front, the 51,000 strike is seeing the highest open interest on both the Put and Call sides, indicating a tug of war between participants.

Key Resistance: 51,000, 51,500

Key Support: 50,700, 50,500

Strategy: Sell 1 lot of the 50,700 strike Put option, and buy 1 lot of the 50,500 strike Put option of August expiry.

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