Trading Plan: Will Nifty 50, Bank Nifty extend losses for third consecutive session?

Nifty Trading Plan

The Nifty 50 finished the rangebound session on a bearish note, extending its downtrend for the second straight day on May 28. Broadly, the index has been consolidating in the range of the 24,450–25,100 zone for the last couple of weeks. In the upcoming session, if the index breaks and sustains below 24,700, the bears may turn active and pull the index down toward 24,500. However, on the higher side, 24,850 is the immediate hurdle, followed by 25,000, according to experts. Meanwhile, the Bank Nifty is also expected to consolidate further, with 55,000–54,900 acting as support and 55,800–56,000 being a key hurdle zone.

On May 28, the Nifty 50 fell 74 points to 24,752, while the Bank Nifty rose 64 points to 55,417. The market breadth was neutral, with 1,290 shares advancing compared to 1,282 shares that were under pressure.

Nifty Outlook and Strategy

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

The benchmark index Nifty has been consolidating within a broad range of 25,116–24,462 over the past 12 trading sessions, reflecting indecision and a lack of clear directional momentum. This prolonged sideways movement has led to a flattening of the key moving averages, indicating a loss of trend strength. Supporting this observation, the 14-period daily ADX (Average Directional Index), a key trend strength indicator, is now quoting near the 20 mark and has been in a declining mode for the past 7 sessions, signaling weakening trend strength.

Interestingly, while Nifty remains rangebound, the broader markets are painting a different picture. Both the Nifty Midcap 100 and Nifty Small Cap 100 indices are showing relative outperformance compared to the frontline index. This is evident from the ratio charts, where the Nifty Midcap 100 to Nifty ratio has surged to an 81-day high, and the Nifty Small Cap 100 to Nifty ratio is at a 70-day high. These developments indicate growing strength and increased participation in the broader market space.

In conclusion, while Nifty's consolidation phase suggests a cautious undertone, the relative strength in midcap and small-cap segments offers a silver lining. This divergence highlights the importance of a stock-specific approach with a focus on quality names in the broader market. Until Nifty witnesses a decisive breakout from its current range, traders and investors may find better opportunities by aligning with the emerging momentum in mid and small-cap stocks.

Talking about crucial levels for Nifty, the zone of 24,550–24,500 will act as crucial support for the index. On the upside, the zone of 25,050–25,100 will act as an important hurdle for the index. Any sustainable move on either side will open the door for a trending move in the index.

Key Resistance: 25,050, 25,100

Key Support: 24,550, 24,500

Strategy: Buy Nifty Futures between 24,710–24,760, with a stop-loss of 24,650, targeting 24,900–24,960.

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

On the daily charts, we can observe that the Nifty has been broadly consolidating in the range of 24,600–25,000 for the last couple of weeks. The selling pressure is being absorbed around the 20-day moving average (24,650). Dips toward this support should be considered as a buying opportunity. Stocks outside of the index are witnessing buying interest, and hence, we should look out for clean breakouts until the index consolidates. Overall, the trend remains rangebound between 24,500–25,100.

Key Resistance: 25,000, 25,100

Key Support: 24,650, 24,600

Strategy: Buy Nifty Futures with a stop-loss of 24,700, targeting 24,900–25,000.

The Nifty continued to consolidate, staying largely rangebound ahead of the monthly expiry. On the hourly chart, the index has slipped below key moving averages — the 21-EMA and 50-EMA — suggesting a weakening bias in the near term. Immediate support is placed at 24,700; a sustained break below this level could lead to increased selling pressure. Additionally, significant Put writing at 24,700 supports this technical view. On the upside, notable Call writing was seen at 24,800. A decisive breakout above this level may trigger short covering by Call writers at the 24,800 strike, potentially fueling a sharp rally.

Key Resistance: 24,800, 25,000

Key Support: 24,700, 24,428

Strategy: Buy Nifty 24,800 strike Call above Rs 90, with a stop-loss of Rs 64, targeting Rs 150 on the May 29 expiry.

Bank Nifty - Outlook and Positioning

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

Over the past 24 trading sessions, the Bank Nifty index has been trading in a sideways range, gradually forming a Stage-2 Cup pattern on the daily chart. Despite the consolidation, the broader trend remains bullish, as the index continues to hold above its key short- and long-term moving averages. The daily RSI has been oscillating in a narrow band of 55–62 for the last 12 sessions, indicating a build-up of momentum ahead of a potential breakout.

From a technical perspective, the current chart setup points to a likely cup pattern breakout in the coming sessions. The zone of 55,800–55,900 will act as crucial resistance. A sustained move above 55,900 could open the gates for a swift rally toward 56,800, followed by 57,500 in the short term. On the flip side, the 20-day EMA placed around 54,900–54,800 is expected to offer immediate support in case of a pullback.

In conclusion, the underlying structure of Bank Nifty remains constructive. A breakout above 55,900 could ignite a fresh leg of upside, while 54,800–54,900 serves as a key demand zone to watch for near-term dips.

Key Resistance: 55,800, 55,900

Key Support: 54,900, 54,800

Strategy: Buy Bank Nifty Futures between 55,400–55,500, with a stop-loss of 55,150, targeting 55,950.

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

Bank Nifty has been consolidating around the 20-day moving average (54,995) for the last 10 trading sessions. Overall, the consolidation is likely to continue, and dips toward the support zone should be considered as a buying opportunity. On the upside, Bank Nifty is likely to move toward 56,100, which is around the all-time high.

Key Resistance: 55,500, 56,100

Key Support: 55,000, 54,900

Strategy: Buy Bank Nifty Futures with a stop-loss of 55,200, targeting 56,100.

Rupak De, Senior Technical Analyst at LKP Securities

Bank Nifty formed a small candlestick on the daily chart, indicating indecisiveness and a continuation of its sideways trend. Although the index is sustaining above the critical 21-EMA, the undertone remains neutral, with the RSI flattening and nearing a bearish crossover. For fresh momentum to emerge, a close above 56,000 is crucial, while a close below 54,800 could turn sentiment negative. Immediate support is placed at 55,000, with resistance at 55,600 and 56,000. The index is expected to trade within a range of 54,800 to 56,000.

Key Resistance: 55,600, 56,000

Key Support: 55,250, 54,800

Strategy: Buy Bank Nifty 55,600 strike Call above Rs 250, with a stop-loss of Rs 190, targeting Rs 400.