16/10/26, Market News and Trading Strategy

After a strong rally on Thursday, bullish momentum improved, with the Nifty 50 decisively moving above its short-term moving averages. However, the broader technical structure continues to warrant caution, as the index remains below its 50-day and 200-day exponential moving averages (EMAs). If buying interest persists, the Nifty 50 could face resistance at 23,100, followed by the 23,300–23,400 zone. On the downside, support is placed at 22,850, followed by 22,600, which remains a crucial support level. Meanwhile, the Bank Nifty needs to break above the 56,000–56,100 resistance zone to sustain its upward momentum. A decisive move above this hurdle could open the door for a rally towards 56,500. On the downside, immediate support is placed at 55,450, followed by 55,250 as a key support level, experts said.

On October 15, the Nifty 50 rallied 375 points, or 1.66%, to close at 22,997, while the Bank Nifty surged 495 points, or 0.89%, to 55,811. However, market breadth was negative, with declining shares outnumbering advancing shares on the NSE. Around 2,011 stocks declined, while 1,234 advanced.

Nifty Outlook and Strategy

Om Mehra, Technical Research Analyst at Samco Securities

Nifty positioning has turned bullish, with India VIX easing 4 percent to 14.03, taking some pressure off option premiums. The current PCR of 1.64 indicates a strong Put side tilt near spot, while the monthly PCR (Put Call ratio) stands at 1.03. Maximum Pain is placed at 22,900, just below the spot level.

Put open interest increased by 8.94 crore during the session, while Call open interest declined by 1.35 crore. Fresh Put writing was concentrated between 22,700 and 22,900, while Call open interest at 22,700 and 22,800 saw unwinding. Among the strikes around spot, Put open interest is highest at 22,500 and 22,700, while the heaviest Call open interest is at 23,000, followed by 23,300. Fresh Call writing remains modest and is concentrated between 23,100 and 23,400. Overall, derivatives positioning favours the upside, with 22,900 emerging as the first support to watch.

Nifty formed a long bullish candle with a small upper wick. The index has recovered more than 3.5 percent from its 52-week low near 22,180 and closed above both the 20-day SMA and the 22,810 resistance level. The RSI has climbed to 50 from oversold levels, while the MACD has generated a positive crossover, although both lines remain below zero.

The Supertrend at 23,120 is the next hurdle, just above the heavy Call open interest concentration at 23,000. A sustained move above this level could extend the rally toward 23,300. The volatility easing and favourable derivatives positioning strengthens the case for upside, the near term outlook remains positive.

Key Resistance: 23,050, 23,150, 23,300

Key Support: 22,900, 22,810, 22,700

Strategy: Buy Nifty October Futures at 22,993, with a stop-loss of 22,850, and target of 23,280.

Jay Mehta, Technical Research at JM Financial Services

Nifty staged a strong rebound from the support zone near 22,180 and broke out above a sloping wedge / ending diagonal pattern in this week. After a minor retracement on Wednesday, the latest session saw renewed follow-through buying. Short-term momentum and trend indicators support continued bullish bias.

While the broader positional structure still remains weak, price is now holding above the 20-day EMA (though still below medium- and long-term averages). The recent bounce appears driven by short-covering, and further upside is possible in the near term. Immediate resistance is at 23,195, followed by a stronger hurdle at 23,500. Support lies at 22,850, with the next level at 22,660.

Key Resistance: 23,195, 23,500

Key Support: 22,850, 22,660

Strategy: Buy Nifty Futures on dips around 22,850 and 22,750 with stop-loss below 22,660. Consider exiting or taking a cautious stance near resistance 23,195; if this level is cleared, book profits around the next resistance of 23,500.

Bank Nifty - Outlook and Positioning

Om Mehra, Technical Research Analyst at Samco Securities

Nifty Bank positioning is balanced with a mild positive tilt. The PCR stands at 1.08, indicating a slight Put side edge, while maximum pain is placed at 55,800, virtually in line with spot.

Put open interest increased by 6.68 lakh contracts during the session, while Call open interest declined by 7.4 lakh. Put writing was visible between 55,500 and 56,000, with the sharpest addition at 55,500. Meanwhile, Call open interest at 55,500 and 55,000 saw unwinding. Fresh Call writing emerged between 55,800 and 56,000, with the highest addition at 56,000. The heaviest Call open interest above spot is concentrated at 56,000, well ahead of Put open interest, followed by 56,500. On the Put side, the strongest support bases are at 55,000 and 55,500. Overall, derivatives positioning favours the upside, with 55,500 as the key support and 56,000 as the major hurdle.

Nifty Bank formed a bullish candle with an upper wick as gains receded near the Supertrend resistance at 56,043. The index closed above the 38.2 percent Fibonacci retracement at 55,665 and remains above the 20-day SMA. The RSI has climbed to 52, while the MACD shows a positive crossover.

The Supertrend near 56,043 coincides with the heaviest Call open interest zone, making 56,000 to 56,050 the key hurdle. A sustained close above this zone could extend the advance toward 56,400. On the downside, 55,500 is the immediate support.

The outlook remains positive as long as Nifty Bank holds above 55,650, with a decisive move above 56,050 needed to strengthen the case for further gains

Key Resistance: 56,200, 56,500, 56,700

Key Support: 55,665, 55,500, 55,400

Strategy: Buy Nifty Bank October Futures at 55,896, with a stop-loss of 55,640, and target of 56,400.

Jay Mehta, Technical Research at JM Financial Services

Bank Nifty rebounded strongly from the support zone, forming a strong reversal candlestick around 53,800, and has rallied toward 56,000 over the past three weeks. It is currently approaching resistance at 56,200, followed by a stronger level at 56,500. Short-term momentum remains positive, and further upside is possible.

Momentum and trend indicators support continued short-term bullish bias. Price is trading above short-term averages but remains just below the 50-day EMA and below the 200-day EMA. Within the banking space, private banks are showing relative strength while PSU banks lag.

Key Resistance: 56,200, 56,500

Key Support: 55,600, 55,300

Strategy: Buy Bank Nifty October Futures on dips around 55,600 and 55,300 with stop-loss below 55,000. Consider exiting or taking a cautious stance near resistance 56,200; if this resistance is surpassed, exit longs around the next crucial level of 56,500.

Report by Sunil Shankar Matkar 

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.