The benchmark indices saw the worst session in four years as bears had a bloodbath on June 4, losing six percent after the Lok Sabha election results came in below expectations. Analysts feel if the Nifty 50 breaks 21,281, the low of Tuesday, then further major selling pressure can’t be ruled out, while the Bank Nifty needs to stay above 46,000; below this level, it can correct up to the 45,000 mark.
The Nifty 50 closed at 21,885, down 1,379 points, and the Nifty Bank plunged 4,051 points or 8 percent to 46,929 on Tuesday. About 2,207 shares declined, and 110 shares advanced on the NSE.
Volatility increased sharply as the exit polls failed to come close to the actual outcome. The Nifty touched an intraday low of 21,281. There was a minor recovery from the lows, but it will be important to see if this can be sustained. On the upside, 22,500 is now an immediate hurdle, and on the downside, 21,280 is an important support. We can expect rangebound movement within this range to digest the high volatility, which should start cooling off.
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Key Resistance: 22,500
Key Support: 21,280
Strategy: Long positions can be created on the Nifty above 22,300 with 22,150 as a stop-loss for a target of 22,500.
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Stop-Loss: 21,280
Om Mehra, Technical Analyst at Samco Securities
The index may experience large swings in the upcoming trading sessions. Tuesday’s sharp fall resulted in a strong bearish candle on the daily chart, engulfing the previous swing low made on May 13, 2024. As the Nifty falls below the 50 and 100 DMAs, the only remaining support is the 200 DMA at 21,095.
The daily RSI (Relative Strength Index) has fallen below the 40 level, indicating weakness. As this is one of the sharpest falls in a single day, any decision to close above 22,500 will turn the Nifty bullish, while a close below 21,500 will weaken the trend even further.
The index may experience large swings in the upcoming trading sessions.
Key Resistance: 22,500
Key Support: 21,500
Strategy: It is a time to remain cautious and adopt a ‘wait and watch’ approach.
Stop-Loss: 21,095
Riyank Arora, Technical Analyst at Mehta Equities
Analyzing the weekly option contracts, the highest open interest (OI) addition occurred on the 23,000 Call option contracts. On the Put side, the highest addition was at the 21,200 Put option. Overall, the market seems to be in a downtrend, with 22,300 acting as an immediate resistance and 21,700 as an immediate support.
Key Resistance: 22,300, 22,500, 22,850
Key Support: 21,700, 21,200
Strategy: Consider short selling the Nifty near 22,000 with a stop-loss at 22,300. The targets for this strategy are 21,700 and 21,200.
Bank Nifty – Outlook and Positioning
Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors
The Bank Nifty had a gap-down opening and was down by nearly 5,000 points at one point. Some recovery was seen later, but the index still closed sharply negative. On the upside, Bank Nifty has an immediate hurdle at 48,800, which is a 50 percent retracement of the fall. Important support is at the 46,000 level. We can expect rangebound movement or consolidation as long as this range is intact.
Key Resistance: 48,800
Key Support: 46,000
Strategy: Long positions can be created on Bank Nifty above 48,100 with 47,600 as a stop-loss and a target of 48,800.
Stop-Loss: 46,000
Om Mehra, Technical Analyst at Samco Securities
The Bank Nifty broke below the lower channel of its rising trendline, indicating a weak setup. The index also slipped below its 20-day and 50-day moving averages. The immediate support level is now at 46,000, which aligns with the crucial 200-day moving average, followed by 45,500. On the upside, resistance levels are seen at 48,000, followed by 48,500.
In the coming weeks, the index might consolidate near the 46,000 zone.
Key Resistance: 48,000, 48,500
Key Support: 46,500, 46,000
Strategy: One should prefer buying only if the index closes above the 48,500 level.
Stop-Loss: 46,000
Riyank Arora, Technical Analyst from Mehta Equities
Overall, the market seems to be in a downtrend, with 48,000 acting as an immediate resistance and 46,000 as an immediate support.
Key Resistance: 48,000, 49,000
Key Support: 46,000, 45,000
Strategy: Consider short selling Bank Nifty near 47,300 with a stop-loss at 48,000. The targets for this strategy are 46,400 and 46,000.
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