Trading Plan: Will Nifty hold crucial 25,000 support, Bank Nifty breaks 51,500?

Nifty Trading Plan

The Nifty and Bank Nifty experienced a bloodbath on October 3, following a gap-down opening, closing at a three-week low. Given the weakness in sentiment and global factors, experts foresee further correction in both indices in the upcoming sessions. If the Nifty 50 fails to defend the 25,000 mark, major selling pressure cannot be ruled out. However, on the higher side, resistance lies in the 25,300-25,500 zone. For the Bank Nifty, immediate support is at 51,500, with 51,000 being a key level, while resistance is positioned at 52,000, followed by 52,500.

On Thursday, the Nifty 50 plunged 547 points, or 2.1 percent, to 25,250—the lowest closing level since September 11. Meanwhile, the Bank Nifty dropped 1,077 points, or 2 percent, closing at 51,845, its lowest level since September 12. On the NSE, 2,022 shares declined, while 495 advanced.

Nifty Outlook and Strategy

Mandar Bhojane, Equity Research Analyst at Choice Broking

On the daily chart, the Nifty index has faced selling pressure for four consecutive days. A bearish candle has formed, signaling continued weakness. The current trend suggests a "sell on rise" strategy, with fresh buying recommended only if the index moves above the 25,800 zone. Immediate support is seen at 25,000, followed by 24,750, while 25,500 is expected to act as immediate resistance. Traders should closely monitor these key levels, as a break below support could trigger further downside, while resistance at 25,500 may cap any short-term recovery attempts.

Key Resistance: 25,800, 26,000

Key Support: 25,000, 24,750

Strategy: Sell on rise near the 25,350 - 25,500 levels, targeting 25,000 and 24,750, with a stop-loss of 25,750 on a closing basis.

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

The bears have taken full control of the market, driving the Nifty down by over 1,000 points from its peak of 26,277 earlier this week. The index has erased gains from the past two weeks and is now trading below its 20 DEMA (Daily Exponential Moving Average). The temporary trend of the market remains bearish, as it is forming a lower top-lower bottom structure over the last four trading sessions. As long as the index holds below the 25,500 zone, weakness is expected toward 25,000 and 24,850, while hurdles are placed at 25,500 and 25,700.

Key Resistance: 25,500, 25,700

Key Support: 25,000, 24,850

Strategy: Sell on rise, with the hurdle of 25,500, for a downside target toward 25,000 and 24,850.

Kunal Kamble, Senior Technical Research Analyst at Bonanza

Options data suggests that market participants expect the Nifty 50 to trade below 25,200, as long as it remains below 26,000. Additionally, the weekly PCR (Put-Call Ratio) of 0.54 is approaching oversold conditions. Based on this setup, short positions should be considered on rallies as long as the index remains below the 26,000 level.

Key Resistance: 25,500, 25,800

Key Support: 25,000, 24,800

Strategy: Sell on rallies.

Bank Nifty - Outlook and Positioning

Mandar Bhojane, Equity Research Analyst at Choice Broking

The Bank Nifty, after reaching lifetime highs, has corrected by more than 2,700 points (5.10 percent), breaking below the short-term 20 and 50 EMAs and forming a bearish candlestick with significant volume, indicating continued bearish pressure. If the price breaks below the 51,750 level, further correction is likely, with the index potentially declining to 51,000, where the 100 EMA provides support, followed by 50,500. A reversal from these levels could present a buying opportunity, but until then, the trend is expected to remain sideways to bearish.

The Relative Strength Index (RSI) is currently trading near 40 and trending downward, signaling strengthening bearish momentum. Additionally, the MACD (Moving Average Convergence Divergence) shows a negative crossover emerging from the overbought region, further reinforcing the likelihood of continued downside movement. Given these technical indicators, traders and investors are advised to hold their positions with a trailing stop-loss to protect gains. Any dip toward the support levels should be considered a potential buying opportunity, as the overall trend remains sideways to bearish in the short term until clear signs of a bullish reversal emerge.

Key Resistance: 52,700, 53,000

Key Support: 51,000, 50,500

Strategy: Sell on rise near the 52,500 - 52,700 levels, targeting 51,000 - 50,500, with a stop-loss of 53,000 on a closing basis.

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

The Bank Nifty index has been forming a lower tops-lower bottoms structure over the past five sessions, indicating a shift in resistance levels to the downside. A strong bearish candle on the weekly chart signals that further weakness may persist in the near term. As long as the index remains below the 52,250 zone, further weakness toward 51,500 and 51,000 is likely, with hurdles at 52,250 and 52,500.

Key Resistance: 52,250, 52,500

Key Support: 51,500, 51,000

Strategy: Sell on rise, with the hurdle of 52,550, for a downside target toward 51,500 and 51,000.

Kunal Kamble, Senior Technical Research Analyst at Bonanza

The Nifty Bank Index also closed negative for the fourth consecutive day, reflecting the prevailing negative sentiment. The increase in open interest (OI) alongside a price decrease suggests a short build-up, with the price trading below the mean, further indicating weakness. On the options front, the 53,000 strike Call holds the highest open interest, followed by the 52,500 strike, where a short build-up has formed. On the Put side, the 52,000 strike has the highest open interest, followed by the 51,500 strike, where a long build-up has occurred, signaling a negative trend for the index. With the weekly PCR at 0.63, the market is approaching oversold conditions. Based on this setup, short positions should be considered on rallies as long as the index trades below the 53,000 level.

Key Resistance: 52,000, 52,500

Key Support: 51,500, 51,000

Strategy: Sell on rally.

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