The Nifty 50 continued its southward journey, losing 1.75 percent from its record high (seen on May 27) amid elevated volatility, but defended the 22,700 level, which coincides with the 10-day EMA (Exponential Moving Average) on May 29, ahead of the expiry of May Futures & Options contracts on May 30. Overall, the index still traded above all key moving averages.
In case of further correction, it may take support at 22,600, which coincides with the 38.20 percent Fibonacci retracement level (from the low of May to the record high), followed by 22,500, the crucial support coinciding with the mid of the Bollinger Band. The key resistance is seen at the 23,000 mark, experts said. Overall, the index may see a range of 22,500-23,000 in the coming sessions.
The Nifty 50 declined 183 points, or 0.8 percent, to 22,705, continuing its correction for the fourth straight session. It has formed a bearish candlestick pattern with an upper shadow on the daily charts and continued forming lower highs and lower lows.
Meanwhile, the Bank Nifty extended its downward move for another session after a gap-down opening due to further profit-booking, down 641 points, or 1.3 percent, at 48,501. Experts expect the index to take support at 48,300, which coincides with the mid of the Bollinger Band and may rebound towards the 49,000 mark. However, breaking this support could bring more selling pressure.
Nifty Outlook and Strategy
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Jigar S Patel, Senior Manager – Equity Research at Anand Rathi
The Nifty is presently navigating within an ascending channel, having recently faced resistance from the upper boundary of this channel and maintaining a position below the 22,800 mark. Anticipated support is around 22,600, while resistance is poised in the 22,800-22,900 range. Before a downward movement, the Nifty could potentially retrace to approximately 22,850 levels. Consequently, a viable strategy could involve purchasing the 22,650-Call option expiring on May 30 within the Rs 70-75 range, targeting gains at Rs 145, with a safeguarding stop-loss set at Rs 35.
Key Resistance: 22,800-22,900
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Key Support: 22,600
Strategy: Purchase 22,650-Call option expiring on May 30, within the Rs 70-75 range, targeting gains at Rs 145
Stop-Loss: Rs 35
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas
The Nifty has witnessed a correction in the last four trading sessions. On the daily charts, we can observe that the Nifty is in the process of retracing the rise it has seen from 22,054 to 23,111. The 38.2 percent Fibonacci retracement level is placed at 22,707. We expect the Nifty to recover over the next few trading sessions. We believe this is a minor degree correction and not a trend reversal. Crucial support is placed in the 22,707 – 22,680 range, while the immediate hurdle is in the 22,860 – 22,830 range.
Key Resistance: 22,825, 22,860
Key Support: 22,707, 22,680
Strategy: Buy Nifty in this decline for target of 22,800, 22,900
Stop-Loss: 22,620
Shitij Gandhi, Senior Research Analyst (Technicals) at SMC Global Securities
Uncertainty surrounding domestic election outcomes and the timing of potential US rate cuts has further exacerbated the market downturn. This recent decline signals caution among investors. We anticipate the Nifty finding support around the 22,550 level. We recommend limiting aggressive long positions and adopting a conservative approach.
Key Resistance: 22,800, 22,900
Key Support: 22,600, 22,500
Strategy: Buy on dips near 22,550
Stop-Loss: Below 22,400, Target at 22,800
Rupak De, Senior Technical Analyst, LKP Securities
Bears remained in control, leading to a sharp fall in the Nifty. During the day, heavy Call writing activity was seen at the 23,000 and 22,800 strikes, while Put writing activity was visible at the 22,800 and 22,700 strikes. The option data suggests that the Nifty might expire around 22,800. A fall below 22,700 might trigger additional selling pressure in the market. Immediate resistance is placed at 22,800.
Key Resistance: 22,800, 23,000
Key Support: 22,600, 22,440
Strategy: Apply Iron Butterfly (May 30 expiry). Buy 1 lot of 22,600 Put at Rs 38.40, sell 1 lot of 22,800 Put at Rs 121 and sell 1 lot of 22,800 Call at Rs 49.15, buy 1 lot of 23,000 Call at Rs 9.60. Maximum profit is approximately Rs 3,054 and maximum loss is Rs 1,946.
Stop-Loss: 22,440
Bank Nifty Outlook and Positioning
Jigar S Patel, Senior Manager – Equity Research at Anand Rathi
Currently, the Bank Nifty is traversing within an upward channel, having recently faced resistance near its previous top around the 49,750-49,900 zone and sustaining a position below the critical level of 48,800.
Support is anticipated around the 48,300 mark, while resistance is situated within the 49,000 band. Before any further downward momentum, there’s a possibility of the Bank Nifty retracing towards the 49,000 levels. Thus, a potential strategy might entail acquiring the 49,000-Call option expiring on June 5 within the Rs 700-680 bracket, aiming for profits at Rs 1,100, while implementing a protective stop-loss at Rs 485
Key Resistance: 49,000
Key Support: 48,300
Strategy: Buy 49,000-Call option expiring on June 5 within the Rs 700-680 bracket, aiming for profits at Rs 1,100, while implementing a protective stop-loss at Rs 485.
Stop-Loss: Rs 485
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas
Crucial support for the Bank Nifty is placed in the 48,300 – 48,250 zone, which coincides with the 20-day moving average and the 61.82 percent Fibonacci retracement level. We believe that this weakness should be used as a buying opportunity for a target of the 49,000 – 49,200 zone. A stop-loss of 48,200 should be maintained for the long positions.
Key Resistance: 49,000, 49,200
Key Support: 48,300, 48,200
Strategy: Buy
Stop-Loss: 48,200
Shitij Gandhi, Senior Research Analyst (Technicals) at SMC Global Securities
Currently, the Bank Nifty is experiencing heightened volatility while trading above its key support level of 48,500 and below its key resistance level of 49,500. Despite this volatility, the broader charts reveal that the index is adhering to a rising channel pattern. Our anticipation is for the index to consolidate within the mentioned range, displaying mixed movements alongside intraday fluctuations. Nevertheless, the overarching outlook remains bullish for the index. Consequently, any downward movements in prices should be perceived as opportunities to initiate new long positions.
Key Resistance: 49,000, 49,500
Key Support: 48,200, 48,000
Strategy: Buy Bank Nifty on dips near 48,200, Target at 48,900
Stop-Loss: Below 47,800
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
