Trading Plan: Will Nifty 50 sustain above 24,700, Bank Nifty hold 55,000 amid elevated VIX?

Nifty Trading Plan

The Nifty 50 and Bank Nifty negated their higher highs–higher lows formations and closed in negative territory on May 27 amid elevated volatility. The India VIX rose 2.86 percent to 18.54, signaling growing nervousness among market participants. Both indices continued to trade well above all key moving averages, which is a bullish sign. According to experts, the Nifty 50 needs to decisively surpass and sustain above 25,000 to initiate an upward move toward 25,100–25,200. On the downside, 24,700 acts as key support, and a break below this level could drag the index toward 24,450. The Bank Nifty defended its support zone near 55,000. If it continues to hold above this level, the index may attempt to move toward the swing high of 56,100. However, a breach below 55,000 could lead to a decline toward the 54,550–54,450 zone.

On May 27, the Nifty 50 declined 175 points (0.70 percent) to close at 24,826, while the Bank Nifty fell 219 points to finish at 55,353. Market breadth was marginally negative, with 1,369 declining shares versus 1,205 advancing shares on the NSE.

Nifty Outlook and Strategy

Vinay Rajani, Senior Technical & Derivative Analyst at HDFC Securities

During the week, the Nifty found support at its 20-day EMA, currently near 24,500, and bounced back. The index is placed above all key moving averages, indicating a bullish trend across all time frames. Last week’s low and the 20-day EMA reinforce a strong support zone between 24,450 and 24,500. Nifty remains in a consolidation phase that could be broken upon a move above the key resistance at 25,116. A break above this level could take the index toward the next resistance at 25,300, which corresponds to the 78.6 percent Fibonacci retracement of the fall from the all-time high of 26,277 to the swing low of 21,743.

From the options perspective, significant Call writing has occurred at the 25,000 strike, where the premium is around Rs 125 for the May 29 expiry. This suggests stiff resistance in the 25,100–25,125 zone. On the downside, strong Put open interest is seen in the 24,700–24,800 band, offering support.

Key Resistance: 25,116, 25,300

Key Support: 24,704, 24,462

Strategy: Buy Nifty Futures at 24,837 with a stop-loss at 24,500 and a target of 25,300.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

Nifty once again failed to sustain above 25,050 levels. Open interest has risen on the Call side near the 25,000 strike. A breakout above 25,050 could lead to a short-covering rally, potentially taking the index higher. The nearest support is at 24,728. Given the high but contained volatility, the market is likely to remain rangebound between 24,728 and 25,050. Traders are advised to wait for a breakout from this range before initiating positional trades. A move above 25,050 could trigger a rally toward 25,240, followed by 25,361. Conversely, a breakdown below 24,728 could drag the index down to 24,460.

Key Resistance: 25,050

Key Support: 24,460

Strategy: Initiate long positions in Nifty Futures above 25,050, with a stop-loss at 24,940 and targets of 25,160 and 25,240.

Preeti K Chabra, Founder of Trade Delta

On the weekly chart, Nifty continues to maintain a higher high, higher low structure, indicating a strong underlying trend. However, the index remains confined within a consolidation range, with resistance at 25,116 and support at 24,462. The weekly RSI stands at 59.84 and remains above the signal line, confirming ongoing bullish momentum.

On the daily chart, the index faced repeated rejection near the 25,070 zone and formed a strong bearish candle on Tuesday. Despite the drop, the Nifty is trading above its 20-day SMA at 24,626, aligning with the middle Bollinger Band. The 61.8 percent Fibonacci retracement level at 24,545 (from the April low of 21,743 to the September 2024 high of 26,277) also adds significance to this support zone.

From a monthly perspective, the Nifty has formed higher highs and higher lows over the past three months, indicating structural bullishness. However, derivatives data reflects caution, with unwinding of in-the-money Put options suggesting a short-term bearish bias. Despite this, the overall trend remains positive, favouring a buy-on-dips strategy near key support zones.

Key Resistance: 25,070, 25,116

Key Support: 24,626, 24,545

Strategy: Buy Nifty Futures around 24,626 with a stop-loss at 24,545 and target of 25,070.

Bank Nifty - Outlook and Positioning

Vinay Rajani, Senior Technical & Derivative Analyst at HDFC Securities

Bank Nifty has been consolidating in a narrow range for the past five weeks. A move above 55,900 would confirm a breakout on the upside. On the downside, the 54,400–54,500 band could act as strong support. The Nifty PSU Bank Index has broken out from a downward sloping trendline on the weekly chart, and the ratio chart of PSU Banks vs Nifty confirms the potential for outperformance by PSU banks.

Key Resistance: 55,900, 57,000

Key Supports: 54,400, 53,483

Strategy: Buy Bank Nifty Futures at 55,350 with a stop-loss at 54,800 and targets of 55,900 and 57,000.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

Bank Nifty has moved sideways for a month, undergoing time correction rather than a price correction—typically a healthy sign before an upside breakout. On the daily chart, the ADX (Average Directional Index) has dropped from 25 to 15, signaling a period of reduced volatility. Such phases are often followed by a surge in volatility.

A decisive breakout from the broader 54,170–56,100 range is awaited. A move above 56,100, the upper boundary, could trigger a fresh rally. On the downside, the nearest support lies at 55,030. A break below this could drag the index to the lower end of the range near 54,000.

Key Resistance: 56,100

Key Support: 54,000

Strategy: Go long on Bank Nifty Futures above 55,700 with a stop-loss at 55,550 and targets of 55,850 and 56,000.

Preeti K Chabra, Founder of Trade Delta

On Tuesday, Bank Nifty formed a bearish candlestick but found support at the 20-day SMA, currently at 54,991, which also aligns with the middle band of the Bollinger Bands. The index closed at 55,352, showing resilience.

The weekly chart shows a consistent pattern of higher highs and higher lows for the past four weeks. However, the index remains within a defined range of 54,400–55,900. Weekly RSI is at 64.23 and remains above its signal line, confirming bullish momentum. Monthly charts also reflect higher highs and higher lows over the last three months, reinforcing the strength of the uptrend.

Given the prevailing bullish structure on higher timeframes and the index's ability to hold key support zones, a buy-on-dips strategy is recommended.

Key Resistance: 55,875, 56,098

Key Support: 55,000, 54,550

Strategy: Buy Bank Nifty Futures around 55,000 with a stop-loss at 54,550 and a target of 55,875.