Trading Plan: Will Nifty defend 23,000, Bank Nifty sustain 48,000 level?

NIfty Trading Plan

The Nifty 50 and Bank Nifty were under pressure on January 24, possibly turning cautious ahead of the monthly F&O expiry and the Union Budget event next week. The Nifty 50 decisively needs to break the range of 23,000-23,400, seen in the past two weeks, on either side to establish a firm direction. A break below 23,000 could open the door for the Nifty toward 22,800-22,600, while above 23,400, possible targets could be 23,600-23,800. In the case of Bank Nifty, as long as the index holds 48,000 on a closing basis, it may move toward the 49,000-49,500 zone. However, a decisive close below 48,000 could trigger sharp selling pressure in the index, experts said.

On Friday, January 24, the Nifty 50 fell 113 points to 23,092, while the Bank Nifty dropped 221 points to 48,368. The market breadth was weak, with 2,063 shares under pressure compared to 482 stocks rising on the NSE.

Nifty Outlook and Strategy

Rajesh Bhosale, Technical Analyst at Angel One

Technically, the Nifty has corrected over 12% from its record high and is approaching a crucial point. On the weekly chart, the price action since September resembles a ‘Falling Wedge’ pattern, with the lower boundary coinciding with the 127% reciprocal retracement of the November bounce, around 22,900-22,800. This zone may act as a key support for the bulls during the event week, supported by a positive divergence in the RSI (Relative Strength Index), which is currently in the oversold zone.

However, if the Budget event fails to inspire confidence amid volatility, we may see the sell-off extend, with the next support level around 22,500. Since January 13, prices have been trading within a range, with any bounce toward 23,400 facing resistance. For the bulls to gain momentum, this level needs to be breached, coinciding with the 20-day exponential moving average. A breakout above this level could signal a further extension of the bounce. While it’s premature to call for a bullish scenario, a breakout above the upper boundary of the falling wedge, currently near 24,000 and above major moving averages, would be crucial to trigger sustained bullish momentum.

Key Resistance: 23,400, 23,800

Key Support: 22,900, 22,800

Strategy: After two weeks of rangebound activity, heightened volatility is expected in the markets during the budget week. Traders are advised to avoid undue risk and be agile in their stock selection.

Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities

The Nifty index posted a weekly loss of 111 points. On the weekly chart, the index formed a small bearish candle with shadows on both sides, near the critical support level of 23,000. This pattern indicates indecisiveness among market participants, with the 23,000 level serving as a key inflection point. A sustained hold above this support may signal a reversal, while a decisive breach below could accelerate downward momentum.

If the index succeeds in crossing and maintaining a position above 23,300, it is likely to attract buying interest and move toward the 23,500–23,700 range. Conversely, a break below 23,000 could trigger selling pressure, pushing the index down to the 22,800–22,500 range. In the week ahead, the Nifty is expected to trade within the range of 23,700–22,500, with a mixed bias. The weekly strength indicator, RSI, is trending downwards and is currently below its reference line, suggesting a negative bias.

Key Resistance: 23,200, 23,400

Key Support: 23,000, 22,800

Strategy: Sell Nifty Futures at around 23,200, with a stop-loss of 23,300, targeting 23,000-22,900.

Ameya Ranadive, Chartered Market Technician and Senior Technical Analyst at StoxBox

The Nifty is showing strong resilience after holding the 23,000 level for the past two weeks. This level has proven to be a crucial support zone, signaling that the Nifty is building a solid base at these levels. The index has been trading within a falling wedge pattern throughout the month of January. Falling wedge patterns are typically bullish, signaling that a breakout to the upside may be on the horizon. However, confirmation of this breakout will come only if the Nifty manages to break above 23,300 and sustains at these levels. A sustained move above this resistance would provide confirmation of a bullish reversal, opening the door for higher targets.

One of the key technical factors supporting a potential upside is Nifty’s position at the 68.3% Fibonacci retracement level (22,989), derived from the June to September 2024 rally. Further confirming the bullish sentiment, domestic institutional investors (DIIs) have started building long positions in Nifty index futures after a two-month pause. This shift indicates that DIIs are confident in a short-term rally, which could lead to further buying pressure. Additionally, foreign institutional investors (FIIs) have been reducing their short positions in index futures, signaling a positive shift in market sentiment and supporting the view of a potential upside.

Key Resistance: 23,300, 23,500

Key Support: 22,900

Strategy: Given the favourable technical setup and positive institutional data, we suggest initiating a buy position on Nifty at around 23,050, with targets of 23,375-23,450. This presents a favourable risk-reward scenario for traders looking to capitalize on the potential breakout. However, if the Nifty falls below 22,925, our view will be negated, signaling that the bullish momentum has been broken.

Bank Nifty - Outlook and Positioning

Rajesh Bhosale, Technical Analyst at Angel One

From a technical perspective, the 20-DEMA around 49,500 is currently acting as a strong resistance zone. Meanwhile, the 89-EMA on the weekly chart, situated around 47,900-48,000, provides immediate support. Moving into the next week, market volatility is expected to remain high, especially with the Union Budget scheduled over the weekend. A decisive breakout from the current range of 49,500-48,000 is likely to occur soon.

Key Resistance: 49,500, 50,000

Key Support: 48,000, 47,800

Strategy: Market participants are advised to stay vigilant and await a clear directional move, which could present potential trading opportunities.

Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities

Bank Nifty closed last week with a loss of 173 points. On the weekly chart, the index formed a bearish candle with a long upper shadow, indicating persistent selling pressure at higher levels. The index faced strong resistance near the breakdown zone at 49,700, which is likely to serve as a significant barrier in the near term. A decisive move above 48,500 could trigger buying momentum, pushing the index toward the 49,000–49,300 range. Conversely, a breach below 48,000 could increase selling pressure, driving the index down to 47,700–47,500.

Looking ahead, Bank Nifty is expected to trade within a range of 49,300–47,500 with a mixed bias. The weekly RSI remains in negative territory, positioned below its reference line, emphasizing a bearish undertone in the broader trend.

Key Resistance: 48,600, 48,800

Key Support: 48,100, 47,800

Strategy: Sell Bank Nifty Futures near 48,600, with a stop-loss of 48,800, targeting 48,100.

Ameya Ranadive, Chartered Market Technician and Senior Technical Analyst at StoxBox

Bank Nifty is showing promising signs of a potential rebound after taking solid support between the 48,000-48,200 levels for the past two weeks. This level has proven to be a key zone, as Bank Nifty has managed to hold above it consistently, despite broader market volatility. The index’s recent price action suggests that it is consolidating and forming a base, which could lead to a strong upside if these support levels hold.

A major factor to watch is the RSI, which stands at 37—an indication that Bank Nifty is currently oversold. This typically signals that selling pressure is easing, and the index could be primed for a reversal. In addition, the Moving Average Convergence Divergence (MACD) has recently shown a positive crossover, which is a bullish signal, suggesting that momentum is shifting in favour of the buyers. This combination of oversold conditions and a bullish MACD could be a recipe for a strong rebound in the near term.

The technical setup also suggests that Bank Nifty is in a good position for a short-term rally, with the immediate support at 48,000 providing a solid cushion for further upside. If the index manages to break through the resistance levels around 48,550-48,750, it could pave the way for a move toward 49,200, a key target. Given the current price action and technical indicators, the risk-reward ratio is favourable for investors looking for an entry point.

Key Resistance: 48,550, 48,750

Key Support: 48,000

Strategy: Considering the positive risk-reward profile, we suggest initiating a buy position on Bank Nifty at current levels around 48,300, targeting 48,950-49,200. However, this view will be negated if the index breaks below 47,900, indicating that the bullish momentum is weakening.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.