Trading Plan: Will Nifty, Bank Nifty extend northward journey?

Nifty Trading Strategy

Bulls maintained control over Dalal Street, pushing the Nifty 50 above 24,600 for the first time on July 15. The benchmark indices reported a fresh record closing high, forming a Doji candlestick pattern on the daily charts. Hence, the upcoming session is expected to be crucial. If the index sustains 24,500, the focus will be on the 24,700-24,800 range, with crucial support at 24,300-24,200. The Bank Nifty is expected to climb towards 53,000, as long as it holds above 52,000 on a closing basis, according to experts.

On Monday, the Nifty 50 rose 86 points, or 0.35 percent, to 24,587. The Bank Nifty jumped 177 points, or 0.34 percent, to 52,456. On the NSE, 1,239 shares advanced while 1,142 shares declined.

Nifty Outlook and Strategy

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

The Nifty has been advancing, forming higher tops and higher bottoms, keeping the uptrend intact. The momentum indicator MACD (Moving Average Convergence Divergence) remains in the buy mode across hourly, daily, and weekly charts. As long as these three time frames align positively, the trend is likely to remain upbeat. The immediate support levels for the Nifty are now at 24,470 and 24,330, with an upside target of 24,800, which represents the upper end of the rising channel on daily charts.

The FII trend continues to be positive. However, a sharp profit booking from them could potentially reverse the trend. The maximum pain and modified maximum pain are at 24,500 and 24,561 respectively, with the Nifty trading above both levels, indicating short-term positivity. Moreover, the Nifty is trading above its monthly VWAP (volume-weighted average price), and the PCR (Put Call Ratio) stands at 1.17 for the weekly expiry, supporting a positive outlook from both technical and derivatives perspectives.

Key Resistance: 24,800

Key Support: 24,470, 24,330

Strategy: Buy at 24,581 and on dips near 24,500, targeting 24,800 with a stop-loss at 24,450.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

The Nifty 50 shows strong momentum and nears the psychological level of 25,000. While some momentum indicators suggest overbought conditions, the market may stay overbought for some time. An intermediate resistance is anticipated around the 24,700 level. Immediate support lies around the 10-day moving average (24,300), with the 20-day moving average (24,000) serving as a key support level.

Key Resistance: 24,700, 24,850, 25,000

Key Support: 24,450, 24,300, 24,150

Strategy: Buy around 24,500, with a stop-loss at 24,300, targeting 25,000.

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

Looking ahead, with a bullish trend overall, the zone of 24,530-24,510 is immediate support for the index. Remaining above 24,510 suggests continued upward movement towards 24,750 and potentially 24,900 in the short term. On the downside, slipping below 24,510 would find support in the 24,410-24,350 zone.

The 24,700 strike has significant Call open interest, followed by the 24,800 strike. On the Put side, 24,600 has notable open interest, followed by the 24,500 strike.

Key Resistance: 24,750, 24,900

Key Support: 24,510, 24,410

Strategy: Given the bullish view, consider a Bull Call spread (buying the 24,600 Call at Rs 102 and selling the 24,750 Call at Rs 37) to capitalize on the upward bias.

Bank Nifty - Outlook and Positioning

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

The momentum has weakened for the Bank Nifty in the short term. The hourly momentum is in buy mode, whereas the daily is in sell mode, and the weekly momentum is in buy mode. Hence, all of them are not in sync, which prevents a clear trend in the short term.

However, on the weekly charts, the index has broken its rising trendline, which now acts as support going forward at the 51,500 levels. From a derivatives perspective, 53,000 exhibits the highest Call open interest, posing an immediate hurdle, while 52,000 Put has the highest open interest, providing support. This establishes a defined range of 1,000 points. The maximum pain and modified maximum pain are at 52,500 and 52,501, respectively. Therefore, a trend above 52,501 suggests bullish momentum towards 53,000 levels, whereas a trend below 52,500 indicates bearish sentiment towards 52,000 levels. The Nifty PSU Bank Index has made a comeback, a positive development in the short term. If the Nifty Private Sector Bank Index also performs positively, the likelihood of reaching 53,000 levels increases.

Key Resistance: 53,000, 53,500

Key Support: 52,000, 51,500

Strategy: Buy above 52,501, targeting 53,000 and 53,500, with a stop-loss at 51,900.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

Bank Nifty has been underperforming recently but respects its 20-DMA around the 52,000 level. Maintaining above this could lead to moves towards 53,500 and 54,000. Conversely, breaking below the 20-DMA might prompt profit booking towards 51,000.

Key Resistance: 52,800, 53,500, 54,000

Key Support: 52,000, 51,750, 51,000

Strategy: Buy at current levels, with a stop-loss below 52,000 and targets at 53,500.

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

For the past seven trading sessions, Bank Nifty has oscillated between 52,818 and 51,749. Due to this consolidation, the daily RSI has entered a sideways zone. Immediate support for the index is around 52,250-52,200, with further support at 51,950-51,900 if it drops below. On the upside, resistance is expected at 52,700-52,750, with sustained movement above 52,750 likely to test 53,100 and 53,400 in the short term.

The 52,500 strike shows significant Call open interest, followed by 53,000. On the Put side, 52,500 and 52,000 have notable open interest.

Key Resistance: 52,750, 53,100, 53,400

Key Support: 52,200, 51,900

Strategy: No strategy is recommended as the index is currently in a range.

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