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

Nifty, Bank Nifty Trend

The Nifty 50 showed a healthy recovery from the day's low, although it closed lower and formed a lower top-lower bottom formation on September 4. Hence, most experts believe the uptrend is still intact. According to them, if the index manages to close above the 25,300 level, then 25,400-25,500 can't be ruled out in the coming sessions, while the 25,073, the previous swing high (August 1), is expected to be immediate support, with 25,000 being sacrosanct support. As long as the Bank Nifty stays above all key moving averages, the upward journey towards the 51,800-52,000 zone can't be ruled out amid consolidation.

On Wednesday, the Nifty 50 was down 81 points at 25,199, snapping a 14-day winning streak. The Bank Nifty dropped 289 points to 51,400. On the NSE, 1,312 shares declined, while 1,116 shares advanced.

Nifty Outlook and Strategy

Jatin Gedia, Technical Research Analyst, Capital Market Strategy at Sharekhan

On the daily charts, we can observe that the Nifty has retested the breakout above 25,078, which was the previous swing high. There may be some consolidation over the next few trading sessions; however, the uptrend is still intact. The crucial support zone on the downside is placed at 24,900 – 24,850, and until this zone is not breached on the downside, we expect the Nifty to target levels of 25,500 from a short-term perspective.

Key Resistance: 25,300, 25,350

Key Support: 25,100, 25,000

Strategy: Buy Nifty with a stop-loss of 25,120 and a target of 25,300.

Shitij Gandhi, Senior Technical Research Analyst at SMC Global Securities

Selective buying in heavyweight stocks helped trim some losses during the day. This move indicates that the bulls are still keeping control over the markets. From here on, we might see some consolidation in the prices. Technically, the Nifty has a key psychological support at the 25,000 level, and the bias is likely to remain in favor of bulls as long as this level holds. We recommend maintaining a focus on stock selection.

Key Resistance: 25,350, 25,450

Key Support: 25,150, 25,000

Strategy: Buy on dips near 25,200, with a stop-loss below 25,050, and a target of 25,450.

Vidnyan S Sawant, Head of Research at GEPL Capital

The RSI (Relative Strength Index) momentum indicator shows negative divergence on both the weekly and daily charts, signaling a cautious outlook for the short to medium term. The Nifty has immediate support at the 25,000 level, followed by 24,800. If the index closes below 24,800, a correction could lead the market down to 24,400, and potentially 23,900. On the upside, resistance is seen at the all-time high of 25,333, followed by the 25,700 level.

Key Resistance: 25,333, 25,700

Key Support: 24,800, 24,500

Strategy: Buy Nifty on a dip near 25,000 for a target of 25,400, with a stop-loss of 24,800.

Bank Nifty - Outlook and Positioning

Jatin Gedia, Technical Research Analyst, Capital Market Strategy at Sharekhan

The Bank Nifty traded within the range of the previous trading session and formed an Inside Bar pattern on the daily charts, making the extremes of the range 51,750 – 51,240 crucial levels to watch out for during the upcoming trading session. We believe that the Bank Nifty is in a pullback mode and we expect it to continue over the next few trading sessions. On the upside, 51,900 – 52,000 is the immediate hurdle, and crucial support is placed at 51,000 – 50,900.

Key Resistance: 51,900, 52,000

Key Support: 51,000, 50,900

Strategy: Buy Bank Nifty with a stop-loss of 51,000, and a target of 51,900 - 52,000.

Vidnyan S Sawant, Head of Research at GEPL Capital

The Bank Nifty is outperforming the benchmark Nifty this week, maintaining a higher high, higher low formation on the weekly charts after finding strong support at its 20-week SMA (Simple Moving Average). On the daily charts, the index has been forming a rising wedge pattern over the past few days. The weekly RSI is trending upward and remains above the 60 level, indicating positive momentum for the short to medium term. On the upside, Bank Nifty faces immediate resistance at 51,800, followed by 52,600 and 53,357 levels. On the downside, support is placed at 50,900, followed by 50,300.

Key Resistance: 51,800, 52,600

Key Support: 50,900, 50,300

Strategy: Buy Bank Nifty if it sustains above 51,800 for a target of 52,600, with a stop-loss of 50,450.

Shitij Gandhi, Senior Technical Research Analyst at SMC Global Securities

The Bank Nifty also witnessed a decline and could not manage to break its crucial hurdle of 52,000 once again. A dip was seen coming towards its critical support level of 51,500, where the index witnessed renewed buying interest. For Bank Nifty, as long as the 51,000 level holds, we can expect a potential rally in the Bank Nifty in the upcoming sessions. On the higher side, the Bank Nifty faces a major hurdle in the zone of 51,900-52,000.

Key Resistance: 51,800, 52,000

Key Support: 51,400, 51,200

Strategy: Buy Bank Nifty on dips near 51,400, with a stop-loss below 51,000, and a target of 52,000.

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