Trading Plan: Will Nifty 50 defend 22,500, Bank Nifty climb toward 49,000?

Nifty Trading Plan

Bears further tightened their grip over Dalal Street, dragging the Nifty 50 sharply down in the opening trade itself on February 24. The index closed below the support trendline with a negative bias in momentum indicators. Hence, experts expect the downtrend to continue in the upcoming sessions, with immediate support at 22,500 and key support at 22,400. Below this, major selling pressure cannot be ruled out. However, on the higher side, 22,700-22,800 is likely to act as resistance. As long as the Bank Nifty holds above 48,300, a bounce back toward 49,000 cannot be ruled out. But closing below 48,300 may drag the index toward 48,000-47,800.

On Monday, February 24, the Nifty 50 dropped 243 points (1.06%) to 22,553, while the Bank Nifty fell 329 points (0.67%) to 48,652. The market breadth remained weak, with 1,981 shares declining compared to 663 shares that gained on the NSE.

Nifty Outlook and Strategy

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

The Nifty closed below the 22,800 level for the second consecutive day, mainly due to pressure from the Nifty IT and Nifty Metal Index. The index has now reached the lower end of the falling wedge pattern, so 22,500 to 22,600 becomes a critical support level from here on. The overall data remains negative as the index is trading below its maximum pain level of 22,700 and modified maximum pain level of 22,715. These levels will act as crucial resistance.

The PCR (Put-Call Ratio) has fallen to 0.62, clearly indicating that the bears have an upper hand, as there was aggressive call writing at higher levels, from the 22,600 strike until the 23,000 strike. Thus, the medium-term reversal is now pegged at the 23,000 levels. The 30-day VWAP (volume-weighted average price) is now pegged at 23,220, which will act as a crucial resistance going forward. Therefore, the short- to medium-term trend remains negative, with critical support at 23,500 on futures. The only unusual thing is that both the IVs (implied volatility) and the index price are moving in the same direction—down. Typically, they move opposite. So, either one will provide a big move from the current levels, possibly on the day of the monthly settlement or shortly after it.

Key Resistance: 22,700, 22,800

Key Support: 22,500, 22,350

Strategy: Sell Nifty Futures with a stop-loss of 22,800, targeting 22,350.

Jigar S Patel, Senior Manager - Equity Research at Anand Rathi

In the last session, Nifty held above the 22,500 level throughout the session. Notably, Nifty is at the lower Bollinger Band on the daily chart, with the RSI (Relative Strength Index) around the 30 mark, indicating oversold conditions. These technical signals suggest a potential short-term recovery or relief rally in the coming sessions, but sustaining higher levels will be key. Key technical levels to watch include immediate resistance at 22,800, where selling pressure may emerge, while 22,500 serves as a crucial support zone.

Key Resistance: 22,800, 23,000

Key Support: 22,500, 22,400

Strategy: Buy Nifty Futures near 22,600, with a stop-loss of 22,400, targeting 23,000.

Anshul Jain, Head of Research at Lakshmishree Investments

Nifty ended the session with a bearish gap-down and a narrow-range bearish candle, indicating a lack of follow-through selling despite the weak open. The index has witnessed a structural breakdown, with the next immediate downside target likely around 22,400. Any attempts to rally toward 22,600 should be viewed as opportunities to initiate fresh short positions, as sustained strength above 22,640 is unlikely in the near term. Unless the index reclaims this level, the broader sentiment remains bearish. Traders should monitor price action closely, as failure to hold 22,400 could extend the decline further. Caution is advised, with a focus on shorting near resistance and avoiding premature bottom-fishing. Stay disciplined and manage risk accordingly in the coming sessions!

Key Resistance: 22,600, 22,640

Key Support: 22,500, 22,400

Strategy: Sell Nifty Futures on rallies toward 22,600 for an immediate downside target of 22,400.

Bank Nifty - Outlook and Positioning

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

Bank Nifty has been forming lower tops and lower bottoms, hence the trend is negative. However, the downside momentum in Bank Nifty is less compared to Nifty, as the index has been bouncing back from lower levels. The PCR has jumped back to 0.74, mainly due to aggressive Put writing at the lower levels of 48,000 and 48,500, indicating that as long as these levels are held, the index will not fall sharply. Call writing was witnessed from the 48,600 to 49,000 strikes, so these levels will act as resistance on the upside. However, beyond 49,000, there is no major hurdle as of now. The maximum pain level is also 49,000, so beyond this level, there is a high chance of short covering, which could help the index bounce back.

Key Resistance: 49,000

Key Support: 48,500, 48,000

Strategy: Buy Bank Nifty Futures above 49,000, with a stop-loss of 48,400, targeting 50,000 and 50,500.

Jigar S Patel, Senior Manager - Equity Research at Anand Rathi

In the last session, Bank Nifty found support at the bullish gap of January 28 and rebounded to close above 48,650. Notably, it is at the lower Bollinger Band on the daily chart, forming a hammer-like pattern, which indicates potential reversal signals. These technical factors suggest a possible short-term recovery or relief rally. However, sustaining higher levels will be crucial for further upside momentum. Key technical levels to watch include immediate resistance at 49,000, where selling pressure may emerge, while 48,300 serves as a crucial support zone.

Key Resistance: 49,300

Key Support: 48,000

Strategy: Buy Bank Nifty Futures near 48,600, with a stop-loss of 48,100, targeting 49,600.

Anshul Jain, Head of Research at Lakshmishree Investments

Bank Nifty ended the session with a bullish hammer, rejecting the daily swing low of 48,525. A move above 48,800 could trigger fresh short covering, leading to an immediate upside toward 49,100. Beyond this, the swing high of 49,600 becomes the logical target for this reversal. Traders should watch for confirmation above 48,800 for momentum continuation.

Key Resistance: 49,100, 49,600

Key Support: 48,500, 48,200

Strategy: Buy Bank Nifty Futures on dips to 48,500 or on a breakout above 48,800, targeting an immediate upside of 49,100 and, beyond that, 49,600.