Trading Plan: Will Nifty, Bank Nifty manage to rebound after a day of correction?

NIfty Trading Plan

The Nifty and Bank Nifty recouped around half of their intraday losses before closing in the red on February 3, but both indices defended the midline of Bollinger Bands (i.e., 20-day SMA) on a closing basis, with a bullish candlestick pattern formation. If the Nifty 50 sustains 23,250, an upward trend toward 23,500-23,600 could be possible in the upcoming sessions. The crucial support is placed at 23,000. In case of Bank Nifty, as long as the index stays above 48,900, a rally toward the 49,500-50,000 zone is likely. However, if it falls below 48,900, selling pressure may emerge, according to experts.

On Monday, February 3, the Nifty 50 closed at 23,361, down 121 points (0.52%), while the Bank Nifty dropped 296 points (0.6%) to 49,211, with weak market breadth. About 1,931 shares declined, against 649 shares that rose on the NSE.

Nifty Outlook and Strategy

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

The Nifty managed to bounce back from the lower levels around 23,200 after a gap-down opening in the last trading session. On the downside, 23,000 to 23,200 are critical support levels. In previous weekly expiries, this zone acted as resistance, and once it was breached, the recovery continued up to the 23,600 level. For this week, the Nifty has a solid Put base in the range of 23,000 to 23,300, with Put additions observed at the 23,200 and 23,300 strikes in the last session. The 24,000 strike has the highest Call open interest (OI), followed by the 23,500 strike, so immediate resistance is pegged at 23,500 and above that at 24,000.

There has been aggressive Call writing at the 23,500 level, making it difficult for the index to break through that level easily. Thus, the breakout is expected only above 23,500 in the near term. The PCR (Put-Call ratio) is at 0.74, indicating a bearish sentiment. The maximum pain and modified maximum pain levels are at 23,400 and 23,511, respectively, and the index is currently trading below these levels, which is also negative. Therefore, the short-term range for the index is between 23,000 and 23,500, and a strategy of buying on dips and selling on rallies is recommended until there is a breakout from this range.

Key Resistance: 23,500

Key Support: 23,200, 23,000

Strategy: Buy Nifty Futures on dips near 23,200, with a stop-loss below 23,000, targeting 23,500.

Jigar S Patel, Senior Manager - Equity Research at Anand Rathi

Despite a correction of half a percent, the Nifty 50 found support at the middle band of the Bollinger Bands on the daily chart and rebounded nearly 120 points from the day's low, signaling underlying strength. This bounce suggests that buyers are stepping in at lower levels, preventing further downside. Additionally, the short-term stochastic indicator (8-period setting) is in the overbought zone, indicating continued bullish momentum in the upcoming sessions. Key technical levels to watch include immediate resistance at 23,600, where selling pressure may emerge, while 23,200 serves as a crucial support zone.

Key Resistance: 23,600, 23,800

Key Support: 23,200, 23,000

Strategy: Buy Nifty Futures near 23,400, with a stop-loss of 23,200, targeting 23,800.

Anshul Jain, Head of Research at Lakshmishree Investments

The Nifty saw the formation of a Bullish Hammer on the daily chart, indicating that bulls regained control after the gap-down opening. The index respected both the 8-day and 20-day moving averages, reinforcing the ongoing bullish structure despite near-term volatility. Over the past 18 sessions, price action has remained within a consolidation range between 22,900 and 23,600, with no decisive breakout or breakdown. A sustained move beyond these levels will determine the next trend. Monday's session suggests a higher low, but confirmation through follow-through buying remains crucial.

Immediate support lies at 23,250, while resistance is seen around 23,500. A breakout above this zone could invite momentum toward the upper boundary of the range. If bulls can build on Monday’s strength, a breakout attempt could be on the horizon. Until then, the index remains rangebound, awaiting a decisive move in either direction.

Key Resistance: 23,500, 23,650

Key Support: 23,275, 23,200

Strategy: Buy Nifty Futures above 23,380, with a stop-loss below 23,320 to manage risk effectively. Upside targets remain at 23,500, aligning with key resistance.

Bank Nifty - Outlook and Positioning

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

The Bank Nifty closed in the negative territory for the second consecutive day. However, it has significant support in the range of 48,800 to 49,000 levels, and as long as this range holds, the upside probability is higher. On the upside, 50,000 is an immediate resistance, so the range for the Bank Nifty is between 48,800 and 50,000 levels. There is significant Put OI at the 49,000 level, and Put additions have been observed at the 49,000 strike. However, there has been aggressive Call writing at the 49,500 and 50,000 strikes, indicating selling pressure at higher levels.

The NBFCs performed better compared to the banking stocks, and the Nifty Financial Services index outperformed the Nifty Bank. The PCR is at 0.80, which is bearish, and the maximum pain and modified maximum pain levels are 49,800 and 50,539, respectively. Since the index is trading below these levels, the short-term trend appears sideways to negative. Nevertheless, the 48,800 to 49,000 levels provide strong support.

Key Resistance: 50,000

Key Support: 48,800

Strategy: Until there is a breakout from the 48,800 to 50,000 range, a buy-on-dips and sell-on-rises strategy in Bank Nifty is recommended.

Jigar S Patel, Senior Manager - Equity Research at Anand Rathi

Despite being under pressure, the Bank Nifty found support at the middle band of the Bollinger Bands on the daily chart and rebounded nearly 300 points, signaling underlying strength. This bounce suggests that buyers are stepping in at lower levels, preventing further downside. Additionally, the short-term stochastic indicator (8-period setting) is in the overbought zone, indicating continued bullish momentum in the upcoming sessions. Key technical levels to watch include immediate resistance at 50,000, where selling pressure may emerge, while 48,800 serves as a crucial support zone.

Key Resistance 50,000

Key Support: 48,800

Strategy: Buy Bank Nifty Futures near 49,350, with a stop-loss of 49,000, targeting 50,000.

Anshul Jain, Head of Research at Lakshmishree Investments

For the past few sessions, the Bank Nifty has been consolidating, with clear outer boundaries at 49,600 and 47,900. A decisive breakout beyond this range will set the stage for a trending move. Until then, price action remains choppy. With Nifty signaling bullish intent, traders should closely watch the Bank Nifty’s response. If it follows through with strength, momentum could accelerate sharply. On the flip side, failure to break out could extend the sideways phase. Tomorrow’s (Tuesday) session will be crucial in determining whether the index is ready for its next directional move.

Key Resistance: 49,400, 49,900

Key Support: 49,000, 48,750

Strategy: Initiate a buy on Bank Nifty Futures above 49,400, with momentum likely to trigger short-covering. Add further positions above 49,600 for an upside move toward 50,400. A breakout from consolidation could accelerate gains. Keep a stop-loss below 49,200 to manage risk. Watch for volume confirmation to validate the breakout and sustain bullish momentum.