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Discover whether Nifty and Bank Nifty can maintain their short-term upward momentum through this insightful trading strategy analysis. Gain valuable insights to inform your trading decisions in the current market conditions.
On May 14, the Nifty 50 concluded with a gain of 113.80 points or 0.51 percent, reaching 22,217.8, while the Nifty Bank increased by 105.35 points or 0.22 percent, closing at 47,859.45.
Analysts anticipate a positive market sentiment in the short term, projecting Nifty's relief rally to continue over the next few trading sessions. Additionally, Bank Nifty's chart indicates a bullish outlook from a short-term perspective.
On May 14, the Nifty 50 closed higher by 113.80 points or 0.51 percent at 22,217.8, while Nifty Bank saw an increase of 105.35 points or 0.22 percent, reaching 47,859.45. On the NSE, approximately 1,736 shares advanced while 535 shares declined.
Nifty outlook and strategy
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
Following a correction of around 1000 points over seven trading sessions, Nifty is currently undergoing a pullback phase. Analysts anticipate a relief rally to continue in the upcoming trading sessions. The hourly momentum indicator has exhibited a positive crossover, indicating a buying opportunity. A buy and hold strategy is recommended to capitalize on this upward movement.
On May 14, Nifty exhibited bullish signs by finding support at a higher low of 21,821, compared to the previous low of 21,777. The 22,300–22,330 zone poses a significant challenge due to the convergence of the 20 and 50-day moving averages (DMA). A clear breakthrough above this resistance level could instigate short covering and drive a rally towards 22,500–22,600. Conversely, a decline below the 100-DMA at 22,000 may trigger renewed selling pressure
Key resistance: 22,310 - 22,525 - 22,650
Key support: 22,000 - 21,800 - 21,680
Strategy: Buy
Stop loss: 21,800
Apurva Sheth, Head of Market Perspectives & Research, Samco Securities
Over the past three months, Nifty has been trading within a wide range of 21,750-22,750. The 50 percent retracement of the recent downward move from 22,794 to 21,821 is approximately at the 22,307 level, likely serving as a formidable resistance in the near future. If breached, the index could advance towards 22,500 in the coming week. However, failure to surpass this level may result in a decline towards 22,000 levels.
Key resistance: 22,307 - 22,422 - 22,500
Key support: 22,000 - 21,800 - 21,750
For Nifty, traders can consider implementing a bull call spread in the 23rd May weekly expiry. This involves buying a 22,250 CE and selling a 22,500 CE. The estimated margin required is Rs 11,100, with a maximum profit potential of Rs 3,492 if Nifty closes at 22,500 on expiry. A stop loss should be set to exit if the total position loss exceeds 50% of the max gain, which is Rs 1,746.
As for Bank Nifty, technical analysis indicates a bullish outlook in the short term. With a correction of approximately 3000 points over nine trading sessions, a bullish crossover in the hourly momentum indicator suggests potential short covering ahead. Key resistance levels are at 48,126 - 48,480, while key support levels are at 47,500 - 47,150. The strategy is to buy on dips until 47,600, targeting 48,126 - 48,480, with a stop loss at 47,150.
According to Pravesh Gour, Bank Nifty is exhibiting a bullish trend within an upward channel, finding support at the lower channel line. A bullish engulfing candlestick pattern has formed, with the immediate hurdle at the 20-DMA of 48,150. A breakout above this level could trigger short covering and rally towards 48,600 and 49,000. Conversely, a breakdown below the crucial 100-DMA at 47,200 could lead to selling pressure, pushing the index down to the 200-DMA at 46,000. Key resistance levels are at 48,150 - 48,600 - 49,000, while key support levels are at 47,200 - 46,500 - 46,000. The strategy is to buy with a stop loss set at 47,100.
Source: moneycontrol
