The market sentiment is expected to remain positive in the near term, with analysts forecasting Nifty’s relief rally to persist over the next few trading sessions and Bank Nifty’s chart signalling a bullish outlook from a short-term perspective.
The Nifty 50 settled 113.80 points or 0.51 percent higher at 22,217.8 and Nifty Bank rose 105.35 points or 0.22 percent to 47,859.45 on May 14. About 1,736 shares advanced and 535 shares declined on NSE.
Nifty is in a pullback phase following a correction of approximately 1000 points within 7 trading sessions. We expect a relief rally to persist over the next few trading sessions. The hourly momentum indicator has experienced a positive crossover, signalling a buying opportunity. Buy and hold should be the strategy to trade this upmove.
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Key resistance – 22,308 – 22,423
Key support – 22,078 – 21,934
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Strategy – Buy on dips till 22,170 for a target of 22,308 – 22,423
Stoploss – 22,050
Pravesh Gour, Senior Technical Analyst, Swastika Investmart
Nifty displayed bullish signals on May 14 as it found support at a higher low of 21,821 compared to the previous low of 21,777. The 22,300–22,330 zone is a critical hurdle due to the confluence of the 20 and 50-DMA. We believe that a decisive break above this resistance could trigger short covering and propel a rally towards 22,500–22,600. Conversely, a drop below the 100-DMA at 22,000 might prompt a fresh 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
Nifty is trading in a broad range of 21,750-22,750 for the last three months. The 50 percent retracement of the current leg of the fall from 22,794 to 21,821 is placed around the 22,307 level. This may act as a strong resistance in the immediate term and the index may head towards 22,500 over the next week if it breaches that level. Failure to cross this level can push the index down to 22,000 levels.
Key resistance: 22,307 – 22,422 – 22,500
Key support: 22,000 – 21,800 – 21,750
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Strategy: Traders can place a bull call spread on Nifty in the 23rd May weekly expiry by going long on 22,250 CE and selling the 22,500 CE. The estimated margin to execute this trade is about Rs 11,100. The maximum profit potential will be Rs 3,492 if Nifty closes at 22,500 on expiry.
Stop loss: Exit if the loss on the total position exceeds 50 percent of the max gain, which is Rs 1,746.
A bull call spread consists of one long call with a lower strike price and one short call with a higher strike price, both on the same underlying stock and expiration date.
Bank Nifty outlook and strategy
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
Bank Nifty corrected approximately 3000 points over nine trading sessions. The hourly momentum indicator has exhibited a bullish crossover following a positive divergence, signalling a bullish outlook from a short-term perspective. This also suggests that short covering is likely in the upcoming trading sessions.
Key Resistance – 48,126 – 48,480
Key Support – 47,500 – 47,150
Strategy – Buy on dips till 47,600 for target of 48,126 – 48,480
Stoploss – 47,150
Pravesh Gour, Senior Technical Analyst, Swastika Investmart
Bank Nifty is showing a bullish trend within an upward channel. The index is finding support at the lower channel line and has formed a bullish engulfing candlestick pattern. The immediate hurdle lies at the 20-DMA of 48,150. A breakout above this level could trigger short covering and potentially lead to a rally towards 48,600 and even 49,000. However, a breakdown below the crucial 100-DMA at 47,200 could invite fresh selling pressure, pushing the index down to the 200-DMA at 46,000.
Key resistance: 48,150 – 48,600 – 49,000
Key support: 47,200 – 46,500 – 46,000
Strategy: Buy
Stop loss: 47,100
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