Will Nifty, Bank Nifty sustain upward momentum?

Benchmark indices ended the volatile session of May 16 in the green, buoyed by the rise in global equities following strong US inflation data, fueling expectations of Federal Reserve rate cuts. Analysts suggest that Nifty needs to hold above the 22,350 level for an upmove towards 22,550 – 22,700, while Bank Nifty needs to stay above 47,777 to sustain upward momentum.

The Nifty 50 settled 203 points or 0.92 percent higher at 22,403.85, and Nifty Bank rose 290 points or 0.61 percent to 47,977.05 on Thursday. About 1,286 shares advanced and 990 shares declined on NSE.

Nifty outlook and strategy

Chandan Taparia, Head – Equity Derivatives and Technicals, Broking and Distribution, MOFSL

Nifty formed a bullish candle on the daily timeframe with a longer lower shadow, indicating strong support-based buying, and has started forming higher highs for the last four sessions. Now, it has to hold above the 22,350 zones for an upmove towards 22,550 – 22,700.

Key Resistance: 22,600-22,775

Key Support: 22,000

Strategy: Buy on decline and bull call ladder spread

A bull call ladder spread involves buying a call option, selling two higher-strike call options, and buying another higher-strike call option, typically used when moderately bullish on a stock’s price movement.

Kunal Kamble, Sr. Technical Research Analyst at Bonanza Portfolio

Nifty is trading within a rising parallel channel, consistently respecting the lower rising trend line. The index has found strong support at the 45-day EMA. Thursday’s trading session witnessed a surge in volume, reflecting increased buyer interest. PE option writers are active at lower levels, particularly at 21,800, 21,700, and 21,500. Call buyers have shown aggression in the last two days, suggesting a bullish sentiment. Any downward movement presents a buying opportunity as long as Nifty sustains above 21,700 levels.

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Key Resistance: 22,530-22,750

Key Support: 22,200-21,750

Strategy: Buy on dips

Bank Nifty – outlook and positioning

Chandan Taparia – MOFSL

Bank Nifty has formed a pin bar pattern on the daily scale, characterized by a long lower shadow, indicating buying interest at lower levels. To sustain upward momentum, it needs to maintain levels above 47,777, targeting a bounce towards 48,250 – 48,500 zones. Support levels are seen at 47,777 – 47,500.

Key Resistance: 48,500

Key Support: 47,500

Strategy: For the weekly expiry on May 22, execute a Bull Call Spread strategy by buying 1 lot of 48,000 Call option at Rs 350 and selling 1 lot of 48,500 Call option at Rs 150

Stoploss: Buy on-decline strategy, supported by the 47,500 zones, aiming for a target of 48,500 levels

Also Read: Gainers & Losers: 10 stocks that moved the most on May 16

Kunal Kamble – Bonanza Portfolio

The Nifty Bank has formed a rising parallel channel, finding support along the trend line and closing above the 45-day EMA. The rise in volume suggests increased buyer interest in the index. Additionally, heightened buying in CE options reflects buyer interest, while PE writers are adding new positions, indicating an uptrend.

Key Resistance: 48800-49300

Key Support: 47100-46750

Strategy: Buy

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