Trading Plan: Will Bank Nifty continue to outperform Nifty 50 ahead of RBI policy meet outcome?

Nifty Trading Plan

The Nifty 50 saw minor profit booking on February 5, following a 1.6% rally, suggesting that market participants may be cautious ahead of the RBI's policy decision. The trend remains positive as the index stayed above the 50-day and 200-day EMAs, with the continuation of the higher tops-higher bottoms formation. Hence, as long as the index stays above 23,600, the upward journey toward the 23,800-24,000 zone is likely. However, below 23,600, consolidation may be seen, with support at 23,400. The Bank Nifty extended its uptrend and is expected to climb toward 50,650 and 51,178. On the downside, 50,000 may act as immediate support, according to experts.

On Wednesday, February 5, the Nifty 50 fell 43 points to 23,696. However, the Bank Nifty gained 185 points to close at 50,343, with positive market breadth. About 1,796 shares advanced against 773 shares that declined on the NSE.

The Nifty is consolidating around the 23,650-23,700 zone, where resistance in the form of the 40-week average (23,685) is placed. We believe that this is a brief pause in the overall upmove, and dips towards the support zone of 23,600-23,575 should be considered a buying opportunity. On the upside, the immediate hurdle is placed at 24,150.

Key Resistance: 23,810, 23,830

Key Support: 23,600, 23,550

Strategy: Buy Nifty Futures on dips towards 23,600, with a stop-loss of 23,480, targeting 23,900-24,000.

The Nifty 50 is sustaining at a four-week high, forming a higher high-higher low structure, indicating strength. On the daily charts, the index is holding above the key resistance of 23,500 and trading above its 20-day SMA, reinforcing positive sentiment. The RSI (Relative Strength Index) momentum indicator is above 55, signaling strengthening bullish momentum. Immediate resistance is placed at 24,000, followed by 24,250, while key support levels are at 23,400 and 23,000.

Key Resistance: 24,000, 24,250

Key Support: 23,400, 23,000

Strategy: Buy Nifty Futures near 23,550, with a stop-loss of 23,400, targeting 24,000.

The consolidation in the Nifty 50 was seen in a narrow range as traders remain on the sidelines ahead of the RBI policy meeting. The overall trend of the Nifty remains strong, as the index has witnessed a smart recovery from lower levels and has managed to hold above its 200-day exponential moving average (EMA) on daily charts. With the market currently trading within a broader range of 23,300-24,000, the bias is likely to remain in favour of the bulls. A decisive move above the 24,000 resistance level could trigger renewed buying interest.

Key Resistance: 23,800, 24,000

Key Support: 23,600, 23,500

Strategy: Buy Nifty Futures on dips near 23,600, with a stop-loss below 23,500, targeting 23,800.

Bank Nifty has been leading from the front during the recovery process. We expect the uptrend to continue toward 51,000. Dips towards 50,000, i.e., the 20-hourly moving average support, should be considered a buying opportunity. On the upside, the immediate target is placed at 50,866 (50% Fibonacci retracement level) and 51,000 (20-week average).

Key Resistance: 50,866, 51,000

Key Support: 49,850, 49,800

Strategy: Buy Bank Nifty Futures with a stop-loss of 49,900, targeting 50,866-51,000.

After a corrective phase, Bank Nifty has rebounded from a key support confluence, which includes the 50% Fibonacci retracement level and a polarity shift from the December 2023 swing high. On the daily charts, the index is maintaining a higher high-higher low structure, signaling strength. Additionally, the RSI is rising and positioned above 55, indicating improving positive momentum.

Key Resistance: 51,050, 51,980

Key Support: 48,900, 48,100

Strategy: Buy Bank Nifty Futures near 49,400 for a target of 51,050 and a stop-loss of 48,900.

The Bank Nifty also witnessed some see-saw movements during Wednesday's session but managed to close in positive territory. Technically, the index has already surpassed its key psychological level of the 50,000 mark and also closed above its 200-day EMA on daily charts. The bias is likely to remain in favour of the bulls, and any dip should be used to create fresh longs.

Key Resistance: 50,600, 51,000

Key Support: 50,000, 49,700

Strategy: Buy Bank Nifty Futures on dips near 50,100, with a stop-loss below 49,700, targeting 50,800.