Trading Plan: Will Nifty 50 extend its rally to reclaim 22,500, Bank Nifty break above 48,800?

Nifty Trading Plan

The Nifty 50 showed a healthy bounce back above the immediate hurdle of 22,300, closing more than 1 percent higher on March 5 after recording consistent losses over the previous 10 days. If the index manages to defend the 22,300 level, it is likely to face resistance at 22,500. Above that, 22,800 will be a crucial zone to watch. However, key support is placed in the 22,000-21,950 zone, according to experts. The Bank Nifty extended its gains for another session. The index needs to close and sustain above 48,800 (5-week EMA) for a rally beyond 49,000. Until then, 48,000 is expected to act as crucial support on a closing basis.

On Wednesday, March 5, the Nifty 50 rallied 255 points (1.15%) to 22,337, and the Bank Nifty finished at 48,490, up 245 points, with positive market breadth. A total of 2,321 shares recorded gains compared to 326 declining shares on the NSE.

Nifty Outlook and Strategy

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

The benchmark index, Nifty, experienced 10 consecutive days of negative closing, marking its longest losing streak in the last 29 years. However, on Wednesday, the index found support near its 100-week EMA and the 38.2% Fibonacci retracement level of its prior rally (15,183–26,277). This triggered a sharp pullback rally, with the Nifty closing above the 22,300 mark. Notably, the broader market exhibited strong bullish momentum, with the Nifty Midcap and Nifty Small Cap 100 surging 2.4% and 2.96%, respectively.

The Nifty’s 14-period daily RSI (Relative Strength Index) tested the low of 21.79 on Tuesday, entering the oversold region as per RSI range shift theory, and thereafter, we witnessed a strong rebound in RSI on Wednesday. Most notably, the daily RSI has given a bullish crossover, indicating a limited downside for now. The daily Stochastic is portraying a similar picture, with %K quoting above %D, and both are in rising mode.

Considering these technical factors, we believe the index is likely to continue its pullback rally in the next couple of trading sessions. As for levels, the zone of 22,420-22,450 will act as an immediate hurdle for the index. If the index sustains above 22,450, we may witness a pullback rally up to the 22,700 level, followed by the 23,000 level. On the downside, support has shifted higher to the 22,200-22,170 level.

Key Resistance: 22,450, 22,700

Key Support: 22,200, 22,170

Strategy: Buy Nifty Futures between 22,430-22,470, with a stop-loss at 22,360, targeting 22,600-22,650.

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

On the daily charts, we can observe that the Nifty has witnessed a short-term trend reversal. On the upside, we expect the Nifty to continue the rally towards the 22,800 zone, as per the role reversal principle. On the downside, the zone of 22,000 will act as crucial support from a short-term perspective. In the case of dips towards the support zone of 22,300–22,280, it should be considered a buying opportunity. The improving PCR (Put-Call Ratio) over the last three trading sessions, along with the positive market breadth, are supporting our bullish outlook on the Nifty.

Key Resistance: 22,800, 23,000

Key Support: 22,100, 22,000

Strategy: Buy Nifty Futures with a stop-loss at 22,250, targeting 22,500-22,550.

Vidnyan S Sawant, Head of Research at GEPL Capital

The Nifty index recently hit a low of 21,964, aligning closely with the 23.6% Fibonacci retracement level of its rally from the Covid low of 7,511 to its all-time high of 26,277. Since then, the index has rebounded and is holding above the 22,000 mark. On the weekly charts, the Nifty has formed a long lower wick candle pattern, signaling strong buying interest at lower levels. Additionally, on the daily charts, it has closed above its three-day high for the first time in over a month, potentially indicating the beginning of a bullish move. Key support levels are positioned at 22,000 and 21,800, while resistance is seen at 22,800 and 23,050.

Key Resistance: 22,800, 23,050

Key Support: 22,000, 21,800

Strategy: Buy Nifty Futures above 22,500 for a target of 22,800, with a stop-loss at 22,300.

Bank Nifty - Outlook and Positioning

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

The banking benchmark index, Bank Nifty, found support near its prior swing lows, aligning with the 100-week EMA zone (near 47,500). This led to a minor pullback rally on Wednesday. However, over the past three trading sessions, the index has underperformed the frontline indices, indicating relative weakness. Going forward, the zone of 48,700-48,800 will act as an immediate hurdle for the index. If the index sustains above 48,800, it is likely to test the 49,500 level, followed by 50,000 in the short term. On the downside, the zone of 48,100-48,000 is likely to provide support in case of any immediate decline.

Key Resistance: 48,800, 49,500

Key Support: 48,100, 48,000

Strategy: Buy Bank Nifty Futures at the CMP of 48,730, with a stop-loss at 48,530, targeting 49,150-49,300.

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

Bank Nifty witnessed subdued price action on Wednesday compared to the Nifty. It has tested the support zone of 47,800–48,000 multiple times and successfully defended it. The daily momentum indicator is witnessing recovery from oversold territory. The overall bias remains positive, and we expect the current rally to continue towards 49,200–49,400 from a short-term perspective. Dips towards the support zone of 48,300–48,200 should be considered a buying opportunity.

Key Resistance: 49,200, 49,400

Key Support: 48,300, 48,200

Strategy: Buy Bank Nifty Futures with a stop-loss at 48,200, targeting 49,000-49,200.

Vidnyan S Sawant, Head of Research at GEPL Capital

The Bank Nifty is attempting to find support at its 20-month EMA (48,230). On the weekly timeframe, the index has been consolidating within a defined range for the past four weeks. Meanwhile, the daily charts reveal a Triple Bottom pattern near the 47,800 level, signaling a potential bullish reversal. However, 47,800 remains a critical support zone, aligning with the recent swing low. A decisive breakdown below this level could intensify bearish momentum, potentially dragging the index down to 46,000. On the upside, immediate resistance is placed at 49,800.

Key Resistance: 49,800, 51,000

Key Support: 47,800, 46,000

Strategy: Buy Bank Nifty Futures above 48,800 for a target of 49,800 and 51,000, with a stop-loss at 48,000.

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