Trading Plan: Will Nifty, Bank Nifty extend upward journey for fourth consecutive session?

Nifty Trading Plan

The Nifty and Bank Nifty extended their upmove for three consecutive days on January 30, possibly hoping for a favourable budget scheduled for February 1. The higher highs-higher lows and bullish candle formations on the daily charts, along with the positive bias in momentum indicators on hourly charts, signalled an upward trend. If the Nifty 50 decisively surpasses 23,300, the next target will be 23,400, followed by 23,600. However, if it stays below 23,300, it may consolidate, with 23,100 acting as support. Meanwhile, the Bank Nifty may face resistance at 49,500, followed by 49,800. The support, however, is placed at 49,000, according to experts.

On Thursday, January 30, the Nifty 50 climbed 86 points to 23,250, while the Bank Nifty finished at 49,312, up 146 points, with market breadth favouring the bulls. A total of 1,395 shares advanced, while 1,166 shares saw a correction on the NSE.

Nifty Outlook and Strategy

Hardik Matalia, Derivative Analyst at Choice Broking

On the daily chart, the Nifty index has formed a bullish-bodied candle with a long upper wick, indicating that the index is struggling to sustain higher levels. This pattern suggests a pause in the current breakout, requiring confirmation for a sustainable move. On the downside, 23,000 serves as a crucial support level, and a breach below this mark could trigger extended selling toward 22,800. On the upside, immediate resistance is observed at 23,300, followed by a critical hurdle near 23,500. A sustained close above these resistance levels is essential to negate the prevailing bearish sentiment and confirm a bullish reversal. Until the index decisively trades above the 23,500 mark, a "sell on rise" approach is advised, as the current bounce lacks confirmation of strength. Traders should avoid overnight long positions and focus on managing risks effectively within this volatile market environment.

Key Resistance: 23,300, 23,500

Key Support: 23,200, 23,000

Strategy: Sell Nifty Futures on rise near 23,400 level for the target of 23,000–22,800 levels, with a stop-loss of 23,500 on a closing basis.

Chandan Taparia, Head Derivatives & Technicals, Wealth Management at Motilal Oswal Financial Services

This week, Nifty witnessed strong buying interest. On Monday, the index opened with a gap down but found support near the 22,800 zone. From there, Nifty surged nearly 500 points over the next three sessions and is now forming a higher top-higher bottom structure on the daily chart, which indicates supports are shifting higher. On the weekly chart, Nifty formed a bullish candle, indicating that upward momentum will continue in the upcoming sessions. Now, it has to hold above the 23,200 zone for an upward move towards 23,400, then 23,500 levels, while supports are placed at 23,150 and then 23,050 zones.

Key Resistance: 23,400, 23,500

Key Support: 23,050, 23,150

Strategy: Buy Nifty Futures on dips with support at 23,000 for an upside target towards 23,500/23,700 zones.

Kunal Kamble, Technical Research Analyst at Bonanza

The Nifty Index has shown signs of positive momentum after respecting its support at 22,850, managing to close above it. Over the past three days, the index has formed a higher high (HH) and higher low (HL) formation, indicating a potential minor trend change to the upside. Additionally, trading above the 21-day double Exponential Moving Average (EMA) further suggests a shift to a positive short-term trend. A divergence between the price and RSI (Relative Strength Index) has also appeared, which could lead to a pullback. The elevated VIX near its highs suggests caution due to potential volatility.

Given the analysis, a pullback toward the 23,450 levels in Nifty is anticipated. With an event on the horizon, taking an options strategy to manage risk would be prudent.

Key Resistance: 23,500, 23,800

Key Support: 23,000, 22,800

Strategy: Buy 1 lot of 23,250 strike Call, and sell 1 lot of 23,500 strike Call

Bank Nifty - Outlook and Positioning

Hardik Matalia, Derivative Analyst at Choice Broking

Although Thursday's session started with sideways movement, the Bank Nifty index sustained its gains at higher levels, indicating continued buying interest from lower levels. Additionally, the index managed to trade slightly above its short-term (20-day) EMA but remains below its medium-term (50-day) and long-term (200-day) EMAs, highlighting the need for a sustained breakout above these key levels to confirm a stronger bullish trend. Until then, the overall sentiment remains cautious, with resistance at higher levels.

Key support levels are placed at 49,200 and 48,800. A breakdown below these levels could trigger further selling pressure, dragging the index toward the 48,500–48,000 range. On the upside, immediate resistance is seen at 49,500, with the next hurdle at 49,800. A sustained breakout above 50,000 is crucial to reverse the prevailing bearish trend and confirm a recovery. Traders are advised to closely watch these key levels, as price action around them will determine the index's next directional move. Implementing strict stop-loss measures and maintaining a cautious stance remains essential in this uncertain market environment.

Key Resistance: 49,500, 49,800

Key Support: 49,200, 48,800

Strategy: Sell Bank Nifty Futures on rise near 49,800 level with a stop-loss of 50,000 on a closing basis, targeting 48,800–48,500 levels.

Chandan Taparia, Head Derivatives & Technicals, Wealth Management at Motilal Oswal Financial Services

The Bank Nifty index formed a small bullish candle on the daily scale as buying was visible at lower levels, while momentum is missing at higher zones. Now, it has to hold above the 49,000 zone for a bounce towards 49,500, then 50,000 levels, while on the downside, support is seen at 49,000, then 48,750 zones.

Key Resistance: 49,500, 50,000

Key Support: 49,000, 48,750

Strategy: Buy Bank Nifty Futures on dips with support at 49,000 for an upside target towards 49,500/50,000 zones.

Kunal Kamble, Technical Research Analyst at Bonanza

The banking index is currently experiencing a pullback, which seems to be heading toward the resistance level at 49,880. This pullback is supported by the stock trading above the 21-day Double Exponential Moving Average (EMA), and the RSI moving above its moving average, indicating positive momentum. The Put-Call ratio (PCR) above 0.7 supports the likelihood of a bullish move in the near term.

Given this setup, options seem to be the most effective way to participate in this anticipated upward movement in the banking sector.

Key Resistance: 49,880, 50,350

Key Support: 49,000, 48,750

Strategy: Buy 1 lot of 49,300 strike Call, and sell 1 lot of 50,000 strike Call.