The benchmark indices saw consolidation, with the Nifty 50 holding above 22,500 amid increasing volatility on May 21. The index maintained an upward journey for the fourth consecutive session. It is likely to consolidate in the range of 22,400-22,600 in the coming session, and if it breaks 22,400, then 22,300 may act as support. However, rising decisively above 22,600 can take the index towards 22,700-22,800 levels, according to analysts. Meanwhile, the 48,000 level is expected to act as a crucial level for further direction in the Bank Nifty, with a hurdle on the higher side at 48,300 and support at 47,800.
The Nifty 50 rose by 27 points or 0.12 percent to 22,529, while the Nifty Bank dropped by 151 points or 0.31 percent to 48,048 on Tuesday. About 1,422 shares declined against advancing 900 shares on the NSE.
Nifty 50, after witnessing a rally in the last four trading sessions, has reached the resistance zone of 22,570-22,600, where the crucial 78.6 percent Fibonacci retracement level of the fall from 22,795-21,821 is placed. The hourly momentum indicator has shown a negative crossover, suggesting a loss of momentum on the upside, which can lead to consolidation over the next few trading sessions.
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Key Resistance: 22,570, 22,600
Key Support: 22,420, 22,380
Strategy: Buy on Dip near 22,400 for a target at 22,600
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Stop-Loss: 22,300
Apurva Sheth, Head of Market Perspectives & Research at Samco Securities
The index has bounced back nicely from the 50 percent retracement support placed around 22,307, which is drawn from the current leg of the fall from 22,794 to 21,821. The nervousness in the markets will increase as the index moves up. We might see selling pressure near the all-time highs. So going forward, the level of 22,800 will act as a strong resistance for the markets.
Key Resistance: 22,750, 22,800
Key Support: 22,500, 22,400, 22,200
Strategy: Traders can sell a Call and Put each with a 22,500 strike and only hedge the Put leg by buying a Put of a 22,200 strike in the May 30 expiry. The estimated margin to execute this trade is about Rs 73,144. The maximum profit will be Rs 7,970 if Nifty closes at 22,500 on expiry.
Stop-Loss: If the loss on the total position exceeds 50 percent of the maximum gain, which is Rs 3,985, then one can exit from this trade.
Riyank Arora, Technical Analyst at Mehta Equities
With the benchmark index touching its important resistance zone of 22,575 – 22,600, the overall risk-reward now looks in favour of shorts. An immediate strong support is placed at 22,500 according to the open interest data, and the next major support is near the 22,300 mark, which is nearly 200 points down from current levels.
For the upcoming weekly expiry dated May 23, 2024, the highest open interest is currently outstanding at 23,000 for Calls and 22,500 for Puts. Any break below 22,500 should push the market down towards the 22,300 level.
Key Resistance: 22,600, 23,000
Key Support: 22,500, 22,300
Strategy: For the upcoming weekly expiry of May 23, buy one Put of 22,550 strike at Rs 112.9 and sell one Put of 22,400 strike at Rs 54. The maximum profit is Rs 2,278 and the maximum loss would be Rs 1,472.
Bank Nifty – Outlook and Positioning
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas
Bank Nifty has been consolidating between 47,800 and 48,300 for the last three trading sessions. We expect this consolidation to break out on the upside and anticipate a rally towards 48,300-48,700 over the next few trading sessions. Axis Bank and State Bank of India are likely to lead this upmove among the Bank Nifty stocks.
Key Resistance: 48,500, 48,700
Key Support: 47,800, 47,650
Strategy – Buy on Dip near 47,800 for target at 48,500, 48,700
Stop-Loss: 47,400
Apurva Sheth, Head of Market Perspectives & Research at Samco Securities
Bank Nifty has been forming higher tops and higher bottoms since February 2024. The index is holding firmly above the trendline drawn from the February lows of 44,429. However, momentum seems to be missing in Bank Nifty. The level of 48,000 is likely to act as strong resistance for the index. On the higher side, 48,500 and 49,000 will act as resistance levels. On the lower side, strong support is placed around 47,000 levels.
Key Resistance: 48,000, 48,500, 49,000
Key Support: 47,500, 47,000
Strategy: Traders can wait for pullbacks to recent lows of 47,350 before taking long positions in the index.
Stop-Loss: One can place a stop-loss around 47,000 for the long positions.
Riyank Arora, Technical Analyst at Mehta Equities
Bank Nifty is trading near its major resistance mark of 48,300 and is experiencing good selling pressure around those levels. Immediate support is placed at the 47,900 mark, below which the next support is near the 47,600 level.
For the weekly expiry on May 22, 2024, the Options Chain indicates the highest Call open interest and highest Put open interest at 48,000. It is expected that the market should stay sideways within a broad range of 500 points between 47,800 and 48,300.
Key Resistance: 48,300, 48,500
Key Support: 47,900, 47,600
Strategy: For the upcoming weekly expiry of May 22, sell one Put of 47,800 strike at Rs 123.9 and sell one Call of 48,300 strike at Rs 61.25.
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.
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