Trading Plan: Will Nifty 50, Bank Nifty extend upward journey and hit new highs?

Nifty, Bank Nifty Trading Strategy

The market bounced back nicely, making a good start to the week on July 1. If the Nifty 50 holds the psychological 24,000 mark, then immediate resistance at 24,200 and 24,500 can be possible in the coming sessions, while the crucial support remains at 23,800. The Bank Nifty is likely to be in the 52,000-53,000 range, and decisively breaking either side of the range can determine the next course of action, experts said.

On Monday, the Nifty 50 climbed 132 points or 0.55 percent to 24,142, and the Bank Nifty rose 233 points or 0.44 percent to 52,575, after a correction in the previous session. About 1,714 shares advanced, and 668 shares declined on the NSE.

Nifty Outlook and Strategy

Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities

Nifty has provided a breakout from the upward sloping parallel channel, and since then the overall trend has been positive. Technically, we are seeing higher tops and higher bottoms on the daily as well as weekly charts. 23,700 is an immediate support, whereas 23,300 is the medium-term support. Since the Index is trading in a blue-sky zone, there is no clear resistance technically; however, the channel target comes to 24,500 levels. As far as derivatives data is concerned, the index has witnessed good Put writing at the 24,000 strike Put, which is the immediate support, whereas 24,500 has seen good Call writing. Hence, the range for the Index in the near term is 24,000 to 24,500 levels. The PCR (Put Call ratio) is 1.07, which is supportive for the bulls. The maximum pain is at 24,050, and the Nifty is trading well above that; however, the modified maximum pain is at 24,177 and it is trading below that, so the minor range is 24,000 to 24,200 levels.

Hence, the short-term trend is sideways to positive until the 23,800 to 24,000 range is held on a closing basis, and the short-term target will be 24,500 levels. The only concern here will be the FII net long short ratio, which is trading at a higher level from where generally there is a reversal in the index. Hence, one needs to be alert and watchful.

Key Resistance: 24,200, 24,500

Key Support: 24,000, 23,800

Strategy: Buy Nifty in the range of 24,100 to 24,000, with a stop-loss of 23,950.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

The all-time high of 24,174 serves as an immediate resistance level. If the Nifty surpasses this level, we can anticipate a move towards 24,260 or 24,400. On the downside, key support levels are at 23,800 and 23,670.

Key Resistance: 24,174, 24,260, 24,400

Key Support: 23,800, 23,670

Strategy: Consider buying on dips near 23,800, with a stop-loss at 23,670 and a target of 24,260.

Mehul Kothari, DVP – Technical Research at Anand Rathi

On the technical front, the index Nifty confirmed the breakout from the rising channel, which had been respected for many months. The theoretical target of the breakout was around 24,200 – 24,400, and the index has made a high exactly near the 24,200 mark. During the past couple of weeks, we witnessed heavy index management in the domestic markets wherein only a handful of stocks were pulling the benchmarks while the broader markets consolidated.

The FIIs' long-short ratio in index futures at over 80 percent indicates that the bullish positions are extremely heavy and there is a possibility of heavy profit booking in the coming weeks. We advise traders to book their short-term long positions. On the downside, the 23,900 – 23,600 zone might act as immediate support in the coming sessions, but even a dip of a few hundred points in Nifty can be very damaging for individual stocks.

Key Resistance: 24,200, 24,400

Key Support: 23,900

Strategy: Sell Nifty or buy Put below 24,000, with a stop-loss of 24,200 and a target of 23,600.

Bank Nifty - Outlook and Positioning

Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities

The overall daily as well as weekly momentum has come well into the bull mode in the Bank Nifty; however, the hourly momentum has gone into the sell mode, indicating some consolidation in the short term. Technically, Bank Nifty, too, has provided a nice breakout from the rising uptrend line, and the support of the same is 52,000 now, whereas, the resistance is 53,000 on an immediate basis, so the short-term range is 52,000 to 53,000 levels.

From the derivatives point of view, there has been the highest Call open interest at the 53,000 strike, whereas the highest Put open interest was at the 52,000 strike, so the range is well defined, i.e., 52,000 to 53,000 levels. The maximum pain is 52,500, and it is trading just above its maximum pain. So, until 52,500 is held, it can inch towards 53,000 on an immediate basis, and below those levels, it can slip to 52,000 levels. So, the range here is quite clear: 52,000 to 53,000, and a breakout from this range will further decide the next directional move.

Key Resistance: 52,700, 53,000

Key Support: 52,000

Strategy: Buy on dips near 52,200, with a stop-loss of 52,000 and a target of Rs 52,700 & Rs 53,000.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

Bank Nifty has also shown recovery at around 9-DMA. Now, 53,000 will be the psychological resistance level, and above this, 53,250 is the next resistance level. On the downside, 52,000 is an important support. Below this, 51,200 will be the next demand level.

Key Resistance: 53,000, 53,250

Key Support: 52,000

Strategy: Consolidation in Bank Nifty may continue, so follow buy on dips near 52,000, with a stop-loss at 51,500, and a target of 53,000.

Mehul Kothari, DVP – Technical Research at Anand Rathi

Going ahead, only a move above 53,200 might extend the rally towards the 54,000 mark in the Bank Nifty. On the other hand, a daily close below 52,000 might confirm a temporary top for the index.

Key Resistance: 52,700, 53,200

Key Support: 52,000, 51,000

Strategy: Sell below 52,000 for a target of 51,100 with a stop-loss at 52,400.

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