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

Nifty Trading Plan

The Nifty 50 and Bank Nifty staged a smart recovery from intraday lows, with the former closing moderately lower and later slightly higher on February 12. The chart pattern signals a possibility of an upward trend, which may confirm in the following session. However, the overall trend remains in favour of the bears, experts said. If the Nifty 50 defends 23,000 in the upcoming sessions, the 23,150-23,300 zone is the level to watch on the higher side. But if it falls decisively below 23,000, it can drag the index down toward 22,800, which is the key support. If the Bank Nifty extends its recovery, 49,700 is the level to watch on the higher side, followed by 50,000. On the downside, 49,000 may act as immediate support, followed by 48,700.

On Wednesday, February 12, the Nifty 50 declined 27 points to 23,045, while the Bank Nifty was up 76 points at 49,479. The market breadth was weak, with 1,613 shares seeing a correction compared to 974 shares that gained on the NSE.

Nifty Outlook and Strategy

Sudeep Shah, the Deputy Vice President and Head of Technical and Derivative Research at SBI Securities

From the recent swing high of 23,807, the Nifty index has tumbled by over 1,000 points in just six trading sessions, signaling intense selling pressure. However, on Wednesday, it found support near the previous swing low and staged a modest rebound. This led to the formation of a Dragonfly Doji-like candlestick pattern on the daily chart, which is often seen as an early sign of a potential trend reversal. The long lower shadow indicates buying interest at lower levels, but a decisive follow-through move is crucial to confirm a shift in momentum.

Going ahead, the zone of 23,150-23,180 will act as an immediate hurdle for the index. If the index surges above the level of 23,180, we may witness a sharp pullback rally up to the 20-day EMA (Exponential Moving Average) level, which is currently placed at 23,367, followed by the 23,500 level. On the downside, the zone of 22,800-22,750 will act as crucial support for the index as the prior swing low is placed in that region. If the index slips below the level of 22,750, we may witness further selling pressure down to the 22,500 level.

Key Resistance: 23,180, 23,367, 23,500

Key Support: 22,800, 22,750, 22,500

Strategy: Buy Nifty Futures between 23,080-23,140, with a stop-loss of 23,000, targeting 23,300-23,360.

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

On the daily charts, we can observe that the Nifty almost tested the previous swing low of 22,786 and witnessed a sharp recovery. On the upside, it has faced resistance around the 20-hour moving average (23,160). The daily and hourly momentum indicators provide a divergent view and hence could lead to a consolidation in the near term. The range of consolidation is likely to be 22,900 – 23,200. Overall, the short-term bias remains negative, with a target of 22,670.

Key Resistance: 23,160, 23,200

Key Support: 23,040, 23,000

Strategy: Sell Nifty Futures on a rise towards 23,200, with a stop-loss of 23,300, targeting 23,000-22,900.

Vidnyan Sawant, HOD - Research at GEPL Capital

The Nifty index has faced selling pressure near the 23,800 level, where a sloping trendline connects the swing tops of September 2028 and December 2024. On the daily scale, it is retesting the crucial support level of 22,800 for the third time. A breakdown below this level could accelerate bearish momentum, potentially driving the index lower toward 22,500 and 22,000.

Key Resistance: 23,300, 23,500

Key Support: 22,800, 22,500

Strategy: Sell Nifty Futures below 22,800, with a stop-loss of 22,880, targeting 22,500.

Bank Nifty - Outlook and Positioning

Sudeep Shah, the Deputy Vice President and Head of Technical and Derivative Research at SBI Securities

The banking benchmark index, Bank Nifty, has been exhibiting strong outperformance compared to the frontline indices over the past few trading sessions. While the Nifty currently trades 1.39% below its 20-day EMA, Bank Nifty is holding relatively firm, trading just 0.29% below the same level, which is a clear sign of resilience in the banking sector.

Meanwhile, the daily RSI (Relative Strength Index) has been oscillating within a sideways range for the last 12 trading sessions, indicating a phase of consolidation and a lack of strong directional momentum. A decisive breakout from this range could set the tone for the next significant move.

Going ahead, the zone of 49,700-49,800 will act as a crucial hurdle for the index. If the index sustains above the level of 49,800, we may witness a sharp pullback rally up to the 200-day EMA level, which is currently placed at 50,193, followed by the 50,700 level in the short term. On the downside, the zone of 48,800-48,700 will act as immediate support for the index.

Key Resistance: 49,800, 50,193, 50,700

Key Support: 48,800, 48,700

Strategy: Buy Bank Nifty Futures at 49,700-49,740, with a stop-loss of 49,500, targeting 50,050-50,200.

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

Bank Nifty has been comparatively stronger than the Nifty. It witnessed a sharp recovery intraday and has managed to close above the 20-day moving average (49,288). The hourly momentum indicator has triggered a positive crossover, which is a buy signal. Thus, it can witness some positive price action over the next few trading sessions. On the upside, it can stretch higher towards 50,000 (hourly upper Bollinger band). On the downside, 49,000 is a crucial support from a short-term perspective.

Key Resistance: 50,000, 50,100

Key Support: 49,300, 49,200

Strategy: Buy Bank Nifty Futures with a stop-loss of 49,100, targeting 50,000.

Vidnyan Sawant, HOD - Research at GEPL Capital

On the weekly scale, the Bank Nifty's pullback from the 50% Fibonacci retracement has failed to sustain above the key 12-week and 26-week EMAs, violating the crucial 49,800 level. Now, 47,800 serves as a vital support level, aligning with the recent swing low. A breakdown below this level could intensify bearish momentum, potentially driving the index toward 46,800.

Key Resistance: 49,800, 50,800

Key Support: 48,700, 47,800

Strategy: Sell Bank Nifty Futures below 49,000, with a stop-loss of 49,100, targeting 48,700 and 48,500.

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.