Trading Plan: Will Nifty 50, Bank Nifty extend weakness on first day of August series?

Nifty Trading Plan for August 1

The Nifty 50 and Bank Nifty closed lower after significant volatility. Both indices traded below their 20-day and 50-day EMAs, accompanied by a bearish bias in momentum indicators. Hence, the structure remains broadly consolidative and range-bound, with no clear directional bias. According to experts, unless the Nifty 50 decisively breaks above 25,000, a sell-on-rise strategy is the most tactical approach, with key support at 24,600 (100-day EMA). For the Bank Nifty, the resistance zone at 56,500 needs to be reclaimed and sustained for an upward move toward 57,000. Until then, consolidation is likely to continue, with support at 55,500.

On July 31, the Nifty 50 corrected 87 points to 24,768, while the Bank Nifty fell 189 points to 55,962, with market breadth controlled by bears. About 1,789 shares saw selling pressure compared to 872 rising shares on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The expiry-day volatility in the Nifty underscored a fierce battle between bulls and bears. Despite broader market weakness, the index held firm near the 24,550–24,600 range (100-DEMA), suggesting that buyers are defending key support. However, the strong rejection from the 24,900–25,000 zone, laden with heavy Call open interest and converging short-term averages, confirms it as a major hurdle. The RSI near 40 indicates sluggish momentum, while rising Put open interest at lower strikes hints at stealthy accumulation. The structure remains broadly range-bound, with no clear directional bias. Unless the Nifty decisively surpasses 25,000, the market favours sellers, making sell-on-rise the most tactical strategy during this consolidation phase.

Key Resistance: 24,800, 25,000, 25,200

Key Support: 24,600, 24,500, 24,300

Strategy: Traders can execute a Bear Call Spread strategy for the August 7 weekly expiry by buying one lot of the 24,750 CE at Rs 179 and selling one lot of the 24,600 CE at Rs 282. This setup is designed to capitalize on a potential downside move while limiting upside risk.

Stop Loss: Hold the strategy until expiry, with the maximum Mark-to-Market (MTM) loss capped at Rs 3,581.

Target: Hold until expiry to achieve a maximum profit of Rs 7,669 or consider booking profits once the MTM gains exceed Rs 5,000.

Jay Mehta, Technical Research at JM Financial Services

The Nifty found support near the 100EMA at 24,600 and staged a strong recovery after Tuesday's gap-down opening, forming a bullish engulfing candlestick. Additionally, the index recovered after another gap-down start on Thursday. However, the daily chart reflects weakness, with lower highs and lower lows since July. Price action in July shows intense selling pressure, as down days exhibit larger candlestick ranges compared to up days, signaling a weak structure. A trendline break occurred on July 18.

With the RSI below 50 and MACD below the centerline, multiple indicators suggest that a bearish-to-sideways trend will persist. The broader trading range is 24,410–25,410, with a short-term range of 24,600–25,100. A break below 24,600 could lead to 24,500 or 24,460, while holding above 25,136–25,160 may trigger an upward move toward the next resistance at 25,350–25,400.

Key Resistance: 25,000, 25,160, 25,270

Key Support: 24,750, 24,600, 24,400

Strategy: Trade the 24,600–25,160 range in the near term. Consider selling near resistances at 25,160, 25,270, or 25,350–25,400.

Hardik Matalia, Derivative Analyst at Choice Broking

The Nifty 50 index witnessed high volatility following a gap-down opening and eventually formed a bullish-bodied candlestick with an upper wick on the daily chart. This indicates buying at lower levels but failure to sustain higher gains. The index attempted to reclaim its medium-term 50-day EMA but faced rejection, highlighting persistent resistance at that level. On the downside, immediate support is seen at 24,600, followed by 24,500. A decisive break below these levels could trigger extended selling pressure, potentially dragging the index toward the 24,300 mark.

On the upside, the 24,900–25,000 zone remains a key resistance area. Sustaining above this zone is crucial for any meaningful upside recovery. As long as the index trades below 25,000, a sell-on-rise approach is advisable, especially given the continued volatility and lack of strong follow-through buying. Traders are advised to stay cautious and maintain strict stop-losses while navigating near-term moves.

Key Resistance: 24,900, 25,000

Key Support: 24,600, 24,500

Strategy: Sell on rise near the 24,900 level, targeting 24,500–24,300 levels, with a stop-loss at 25,000 on a closing basis.

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

Bank Nifty experienced expiry-induced whipsaws but managed to hover above its critical support band of 55,500–55,700, hinting at strong buying interest on dips. Despite intraday pullbacks, the index struggled near 56,500, a confluence of key short-term moving averages, making it a formidable resistance zone. Sustained Call writing at this level confirms supply pressure, keeping rallies in check. The RSI, languishing near 40, reflects lacklustre momentum. While fresh Put writing at lower levels suggests accumulation, buyers remain hesitant without a breakout trigger. Unless the index decisively clears 56,500, the trend stays under bearish influence, making sell-on-rise the most pragmatic stance in this consolidation-heavy phase.

Key Resistance: 56,100, 56,300, 56,500

Key Support: 55,650, 55,500, 55,300

Strategy: Traders can consider selling Nifty Bank August Futures if the price falls below 55,900–55,850, setting a stop-loss above 56,150. Profit-taking can be considered once the index reaches 55,500–55,400.

Jay Mehta, Technical Research at JM Financial Services

Bank Nifty broke below a rising wedge on July 18 and stayed range-bound until it fell below 56,280 on Monday. It retested this level. At the start of the month, multiple bearish divergences were observed on momentum indicators on the daily chart. Currently, the RSI is below 50 and MACD is below the centerline, signaling continued sideways-to-bearish movement. A break below 55,470 could target 55,000 or 54,600. Despite this, Bank Nifty remains relatively stronger than Nifty, hovering near the 50EMA.

Key Resistance: 56,600, 57,000, 57,360

Key Support: 55,470, 55,000, 54,600

Strategy: For a cautious long, wait for a breakout above 57,360. For a sell-on-rise approach, watch for bearish signals near the resistance zones at 56,580–56,600 or 57,300–57,360. A bearish setup may develop below 55,470, aiming for 55,000 and 54,600.

Hardik Matalia, Derivative Analyst at Choice Broking

Bank Nifty witnessed high volatility following a gap-down opening and eventually formed a bullish-bodied candlestick with a long upper wick and a slight lower wick on the daily chart. This indicates an attempt to recover from lower levels but strong selling pressure at the top, leading to a weak close. The index is currently trading below both its short-term (20-day) and medium-term (50-day) EMAs, reflecting near-term weakness. Although Bank Nifty made attempts to reclaim these moving averages during the session, it faced rejection and closed below the 56,000 mark, signaling continued bearish pressure.

On the downside, immediate support is placed at 55,500, followed by a more crucial level near 55,000. A breach below these supports could lead to further downside. On the upside, resistance is seen around 56,300–56,500. A sustained move above 56,500 is essential for the index to regain strength and resume its upward trajectory. Until Bank Nifty holds below the 56,500 mark, a sell-on-rise strategy remains appropriate, with traders advised to remain cautious and maintain strict stop-losses in light of ongoing market volatility.

Key Resistance: 56,300, 56,500

Key Support: 55,500, 55,000

Strategy: Sell on rise near the 56,300 level, targeting 55,500–55,000 levels, with a stop-loss at 56,500 on a closing basis.