17/09/26, Sunil Sankar's Report on Trading Strategy

The Nifty 50 is most likely to see consolidation with a negative bias, especially after the US Federal Reserve expectedly raised interest rates by 25 bps and signalled one more hike this year. The index may attempt to defend the previous day's low of 23,100 amid bearish technical indicators, oil prices holding around the $100-a-barrel mark and US bond yields hovering around the 5 percent level. If the index decisively breaks the 23,100–23,070 zone, a fall below 23,000 cannot be ruled out. However, if it holds above this zone, the 23,400–23,500 levels could be the next targets. Meanwhile, the Bank Nifty needs to defend the 55,800–55,700 zone for a possible upmove towards the 56,700–57,000 zone. A break below this support, however, could trigger panic selling, experts said.

On September 16, the Nifty 50 bounced back 99 points, or 0.43 percent, to 23,218, while the Bank Nifty rallied 498 points, or 0.89 percent, to 56,292. However, market breadth remained in favour of the bears, with about 1,756 shares declining against 1,476 advancing shares on the National Stock Exchange.

Nifty Outlook and Strategy

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

On Tuesday, the benchmark index Nifty failed to surpass its 10-day EMA, triggering a sharp correction thereafter. However, ahead of the crucial Fed interest rate decision, the index traded in a narrow 168-point range on Wednesday and formed an indecisive candle on the daily chart.

The broader trend remains bearish, as the index continues to trade below both its short- and long-term moving averages, which are themselves sloping downward. Momentum indicators also suggest weakness, with the daily RSI remaining in the bearish zone and trading below its 9-day average. Additionally, the daily MACD maintains a negative bias, trading below both the zero line and its signal line. Notably, the MACD histogram has remained in negative territory for the past 23 trading sessions, indicating persistent downside momentum.

Going forward, the 23,050–23,000 zone is expected to act as a key support area, coinciding with the previous swing low. A decisive breach below the 23,000 mark could accelerate selling pressure and drag the index towards 22,700. On the upside, the 23,350–23,400 zone is likely to remain a strong hurdle, and the index would need to sustain above this zone to signal any meaningful recovery.

Key Resistance: 23,350, 23,400

Key Support: 23,050, 23,000, 22,700

Strategy: Buy Nifty Futures above 23,375, with a stop-loss of 23,190 and a target of 23,650.

Vaishali Patel, Senior Manager - Research- Technical Department at Jainam

Nifty witnessed a recovery in Wednesday's session and reclaimed the 23,200 mark after the sharp decline witnessed in the previous session. However, the broader technical structure remains weak, as the index continues to trade below key moving averages and the earlier support breakdown remains intact. The immediate resistance is placed around 23,300–23,400, followed by the crucial 23,600 zone. A sustained move above 23,400 could trigger a short-term pullback towards 23,600, while failure to hold 23,200 may bring selling pressure back.

On the downside, 23,000 is the immediate support, followed by the next major support near 22,700.

Daily oversold momentum indicators and hourly divergences may support intermittent rebounds, along with the broader indices trading near important support levels. However, the recovery is likely to remain vulnerable unless the index decisively reclaims 23,600.

Overall, the near-term outlook remains cautious to negative, with traders likely to maintain a sell-on-rise approach until a clear trend reversal emerges.

Key Resistance: 23,500, 23,600

Key Support: 23,050, 22,700

Strategy: Sell Nifty Futures around 23,400–23,450, with a stop-loss of 23,650 and a target of 23,100.

Bank Nifty - Outlook and Positioning

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

For the last three trading sessions, the banking benchmark index, Bank Nifty, has been consolidating around the 50 percent Fibonacci retracement level of its previous upward move from 52,783 to 58,706. However, the overall undertone remains weak, as the index continues to trade below its short- and long-term moving averages. Moreover, the 20-day and 50-day EMAs are trending lower, indicating a bearish bias. Momentum indicators also reflect caution, with the daily RSI hovering near the 40 mark, suggesting subdued buying strength.

Going forward, the 55,700–55,600 zone is likely to serve as an important support area for the index. A sustained breach below 55,600 could intensify selling pressure and open the door for further downside towards 55,000, followed by 54,500 in the near term. On the upside, the 56,700–56,800 zone is expected to act as a significant resistance band, and the index would need to surpass this hurdle to improve the short-term technical outlook.

Key Resistance: 56,700, 56,800

Key Support: 55,700, 55,600, 55,000

Strategy: Buy Bank Nifty Futures above 56,600, with a stop-loss of 56,150 and a target of 57,300.

Vaishali Patel, Senior Manager - Research- Technical Department at Jainam

Bank Nifty remains under pressure after forming a sequence of lower highs and lower lows since the beginning of September, indicating a weak short-term trend. The immediate support is placed around 55,550–55,700, followed by 55,000. On the upside, 57,000–57,350, where the 50-day DMA and 200-day DMA are placed, is likely to act as an immediate resistance zone, while 57,000 remains a crucial hurdle. A decisive break below 55,550 could extend the decline towards 55,000 and lower levels.

Overall, the outlook remains negative to cautious, with a sell-on-rise approach likely to dominate unless Bank Nifty decisively reclaims the 56,500–57,000 zone.

Key Resistance: 56,650, 57,000

Key Support: 55,700, 55,500

Strategy: Sell Bank Nifty Futures around 56,800–57,100, with a stop-loss of 57,500 and a target of 55,700.

Source: Network18 

Disclaimer: The views and investment tips expressed by experts here are their own and not those of us. We advise readers and traders to check with certified experts before taking any investment decisions.