Trading Plan: Will Nifty 50, Bank Nifty be able to sustain momentum next week?
Trading Plan: Will Nifty 50, Bank Nifty be able to sustain momentum next week?
The market recorded a strong rally during the week, reaching a new closing high, despite some profit-taking on June 28, the first day of the July series. If the Nifty 50 decisively climbs above 24,200, then 24,500 is the level to watch. Until then, consolidation may continue with support at 23,800-23,700. The Bank Nifty is likely to consolidate with support at 51,800, and breaking this level can bring further selling pressure, experts said.
On Friday, the Nifty 50 fell 34 points or 0.14 percent to 24,011, and the Bank Nifty dropped 469 points or 0.9 percent to 52,342. For the week, these indices rallied 2 percent and 1.3 percent, respectively. About 1,262 shares advanced, and 1,056 shares declined on the NSE.
Nifty Outlook and Strategy
Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities
On the weekly chart, the index formed a long bullish candle that engulfed the previous weekly candle and closed above the previous week's high, indicating a positive bias.
The chart pattern suggests that if Nifty crosses and sustains above the 24,200 level, it would witness buying, leading the index towards 24,500-24,600 levels. However, if the index breaks below the 23,900 level, it would witness selling, taking the index towards 23,800-23,600 levels. For the week, we expect Nifty to trade in the range of 24,600-23,600 with a positive bias. The daily and weekly strength indicator RSI (Relative Strength Index) is moving upwards and is quoting above its reference line, indicating a positive bias.
Key Resistance: 24,200, 24,400
Key Support: 23,800, 23,650
Strategy: Buy Nifty near 23,850 with a stop-loss of 23,700 and a target of 24,200-24,350.
Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities
With the Nifty 50 index consistently making higher tops and higher bottoms over the last several weeks and trading above a rising 20 and 50-week SMA (Simple Moving Average), the intermediate uptrend looks set to continue. The only concern is that the 14-day and 14-week RSI are giving negative divergence signals. This suggests that caution is warranted as intermediate upsides could be limited.
We expect the intermediate uptrend to continue if the Nifty 50 holds 23,350 in any correction. The intermediate upside target is at 24,800. In terms of strategy, traders/investors are advised to adopt a selective buying approach with strict stop-losses to control risk.
Key Resistance: 24,174, 24,450
Key Support: 23,805, 23,670
Strategy: Buy Nifty near 24,009, with a stop-loss of 23,350, and a target of 24,800.
Rajesh Bhosale, Technical Analyst at Angel One
While the market appears to be in a strong bull run, the next move in the coming week might be challenging as oscillators across all major time frames are in overbought territory. Often, overbought conditions indicate potential inherent signs; however, in the near term, a cool-down cannot be ruled out. While taking contra-bets and shorting the market is not advised, taking some profits is prudent, as a correction, either in price or time, is anticipated. This correction should be seen as healthy for the ongoing bull run. Given the market's vertical rise into uncharted territory, pinpointing key trading levels is challenging. However, 24,200 to 24,250 is expected to act as immediate resistance, while 23,850 followed by 23,650 may serve as crucial support levels.
If we examine the Nifty option chain for the upcoming week, the highest open interest (OI) in out-of-the-money Call options is at the 24,500 strike, with notable open positions also present at the 24,200 strike, indicating a resistance zone. Conversely, there is not a significant amount of open interest on the out-of-the-money Put side; instead, relatively high positions are seen at the at-the-money (ATM) 24,000 strike for Put. The long-short ratio of foreign institutional investors (FIIs) has now reached an overbought zone, suggesting that a short-term cooldown is likely.
Key Resistance: 24,180, 24,250, 24,330
Key Support: 23,850, 23,730, 23,650
Strategy: Markets have entered overbought territory, making it ideal to book some long positions at the higher levels near the mentioned resistance zones. Conversely, any dip towards the mentioned support levels can be considered a buying opportunity.
Bank Nifty - Outlook and Positioning
Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities
On the weekly chart, the Bank Nifty has formed a bullish candle, making a higher high and higher low compared to the previous week, and closed above the previous week's high, indicating a positive bias.
The chart pattern suggests that if Bank Nifty crosses and sustains above the 52,500 level, it could witness buying, leading the index towards 52,800-53,000 levels. However, if the index breaks below the 52,200 level, it could witness selling, taking the index towards 52,000-51,800 levels. For the week, we expect Bank Nifty to trade in the range of 53,000-51,800 with a positive bias. The daily and weekly strength indicator RSI are moving upwards and quoting above their respective reference lines, indicating a positive bias.
Key Resistance: 52,600, 52,800
Key Support: 52,000, 51,800
Strategy: Buy Bank Nifty near 52,000, with a stop-loss of 51,800 and a target of 52,650-52,800.
Rajesh Bhosale, Technical Analyst at Angel One
Despite experiencing some profit booking in the past two days, the month of June has been very positive, with the Bank Nifty index gaining nearly 7 percent. Most of these gains have come in the last two weeks, pushing indicators into the overbought zone. Although it is not necessary that overbought conditions will lead to a correction or a down move, the next move higher won’t be as smooth as it has been of late and will likely be marked by frequent interruptions. In terms of levels, the index trades in unchartered territory, with no clear resistance in sight. But Thursday's high of 53,180 can be a tough nut to crack and in terms of support, the index is likely to find immediate support in the 52,000-51,900 zones.
On the options front, the highest open interest concentration for out-of-the-money (OTM) strikes on the Call side is at 53,000, indicating resistance. Meanwhile, on the Put side, the 52,000 OTM strike has the highest buildup, indicating support.
Key Resistance: 52,800, 53,000, 53,200
Key Support: 52,000, 51,800, 51,500
Strategy: Bank Nifty may trade in a range. Considering the primary uptrend, a dip towards support should be bought, and profit booking should be considered around the mentioned resistance point.
Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities
With the Bank Nifty breaking its near-term support on Friday, a cautious approach is warranted. The index could now correct towards the next support of 51,957-51,138 in the very near term. Momentum indicators like the 14-day RSI too have turned down and moved below their 9-day EMA.
Key Resistance: 53,030, 53,181
Key Support: 51,957, 51,138
Strategy: Sell Bank Nifty near 52,320, with a stop-loss of 53,030 and a target of 51,138.
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