Trading Plan: Will Nifty and Bank Nifty rebound post US CPI data?

Despite a slight rise in consumer prices, underlying inflation remained sticky due to higher housing and services costs, diminishing hopes of a half-point interest rate cut from the Federal Reserve at its meeting next week.

Indian equity indices faced profit booking at higher levels yesterday, with the Nifty once again dipping below the 25,000 mark ahead of the release of the US inflation data. The Bank Nifty index also saw a sharp sell-off from higher levels, closing nearly 200 points lower.

The latest Consumer Price Index (CPI) data for August 2024 revealed that the annual inflation rate in the US slowed for the fifth consecutive month to 2.5 percent, the lowest since February 2021, down from 2.9 percent in July, and below the expected 2.6 percent. Despite a slight rise in consumer prices, underlying inflation remained sticky due to higher housing and services costs, diminishing hopes of a half-point interest rate cut from the Federal Reserve at its meeting next week.

In India, the BSE Sensex, comprising 30 stocks, declined by 398 points, or 0.49 percent, to close at 81,523, while the broader NSE Nifty fell by 122 points, or 0.49 percent, to finish at 24,918. The total market capitalization of all listed companies on the BSE shrank by Rs 2.47 lakh crore, settling at Rs 461.02 lakh crore.

Nifty Outlook and Strategy

Vidnyan S Sawant, Head of Research at GEPL Capital:

“The Nifty opened lower this week due to profit booking following last week’s record high. Despite this, it has managed to hold above the 20-day Simple Moving Average (SMA) for the last three days. On the weekly charts, a minor bounce suggests that bulls are defending support after last week's Bearish Engulfing candle pattern. The RSI momentum indicator is showing negative divergence on both the daily and weekly charts, moving below the 55 mark, indicating weakening momentum in the short to medium term.

Nifty has immediate support at 24,753, with additional support at 24,400. A close below 24,753 could trigger a correction toward 24,400 and potentially 23,900. On the upside, resistance is at the all-time high of 25,333, followed by 25,700.”

Key Resistance: 25,333 – 25,700
Key Support: 24,753 – 24,400
Strategy: Sell Nifty below 24,753 for a target of 24,400, with a stop loss at 24,950.

Shitij Gandhi, Senior Technical Research Analyst at SMC Global Securities:

“Technically, the 24,800-24,700 zone is likely to act as strong support for the index, while on the higher side, the Nifty is likely to face resistance around the 25,200 mark. The market is expected to remain in consolidation mode with intraday volatility, but with a bullish bias.”

Key Resistance: 25,050 – 25,200
Key Support: 24,850 – 24,700
Strategy: Buy on dips near 24,900, with a stop loss below 24,700 and a target of 25,200.

Jatin Gedia, Technical Research Analyst at Sharekhan:

“On the daily charts, the Nifty has encountered resistance around the 25,100–25,150 zone, where the hourly upper Bollinger Band and the 61.82 percent Fibonacci retracement level are situated. Support is at 24,800–24,750, and the contracting Bollinger Bands suggest a rangebound market over the next few trading sessions. The likely consolidation range is between 24,800 and 25,200.”

Key Support: 24,900 – 24,850
Key Resistance: 25,100 – 25,150
Strategy: Buy Nifty with a stop loss at 24,850 and a target of 25,100.

Bank Nifty Outlook and Strategy

Shitij Gandhi, Senior Technical Research Analyst at SMC Global Securities:

“A dip was observed towards the critical support level of 51,000 as volatility gripped the market. The Bank Nifty is expected to consolidate within the broader range of 50,600–51,500. However, the bias remains in favor of the bulls, with a buy-on-dips strategy advisable as long as the index holds above the 50,400 mark.”

Key Resistance: 51,300 – 51,500
Key Support: 50,900 – 50,700
Strategy: Buy Bank Nifty on dips near 50,900, with a stop loss below 50,700 and a target of 51,250.

Jatin Gedia, Technical Research Analyst at Sharekhan:

“After a sharp pullback rally from 50,500 levels, the Bank Nifty has been consolidating around the 51,000 mark. We expect it to maintain a positive bias in the coming sessions, with an upside target of 51,800–52,000. Support is placed at 50,800–50,700.”

Key Support: 50,800 – 50,700
Key Resistance: 51,900 – 52,000
Strategy: Buy Bank Nifty with a stop loss at 50,800 and a target of 51,900–52,000.

Vidnyan S Sawant, Head of Research at GEPL Capital:

“Bank Nifty has outperformed the benchmark Nifty this week, recovering more than 50 percent of last week’s bearish engulfing candle. The index remains above its 20-week SMA, indicating short-term relief. However, on the daily charts, Bank Nifty recently broke down from a rising wedge pattern. The weekly RSI is trending upward and remains above the 55 mark, suggesting positive momentum in the short to medium term. Bank Nifty faces immediate resistance at 51,800, followed by 52,600 and 53,357. On the downside, support is seen at 50,300, followed by 49,600.”

Key Resistance: 51,800 – 52,600
Key Support: 50,300 – 49,600Strategy: Buy Bank Nifty if it sustains above 51,800, with a target of 52,600 and a stop loss at 51,450.

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