The Nifty 50 and Bank Nifty continued to close higher for the third consecutive session on January 16, with the former outperforming the latter. The market is stable following the recent correction, but the sentiment remains under the control of bears. If the Nifty 50 continues its upward movement, it may face a hurdle at 23,500. However, in the case of profit booking, it may take support at 23,150, followed by 23,050. The Bank Nifty needs to hold above 49,000 for further upward movement toward the 49,500 and 50,000 levels. If it breaks below 49,000, 48,500 may act as support, experts said.

On Thursday, January 16, the Nifty 50 jumped 99 points to reach 23,312, while the Bank Nifty rallied 527 points (1.08%) to close at 49,279, with market breadth favoring the bulls. A total of 1,891 equity shares gained, compared to 620 shares that declined on the NSE.

Nifty Outlook and Strategy

Mandar Bhojane, Equity Research Analyst at Choice Broking

From a technical perspective, the Nifty, after undergoing significant selling pressure from its all-time high, has corrected nearly 12% as of January 13, 2025. The index has been trading below its 200-day EMA, signaling bearish undertones. However, recent price action suggests stabilization, with the Nifty attempting to sustain above the critical support level of 23,000. Thursday’s close above 23,300 has further strengthened short-term bullish sentiment.

Looking ahead, the key resistance level is at 23,750. A decisive breakout above this level could pave the way for a rally toward the next targets at 24,000 and 24,500. Conversely, failure to hold above 23,300 could see the index retesting support at 23,100. A breakdown below this level could accelerate the decline toward 22,800 and subsequently 22,500.

Momentum indicators also suggest early signs of recovery. The RSI (Relative Strength Index) has reversed from oversold territory and is currently at 39.04, moving upward, which reflects improving buying momentum. However, given that January is likely to remain volatile due to Q3 corporate earnings announcements, market participants should exercise caution.

Overall, while the Nifty is showing initial signs of recovery, sustaining above-critical levels and a favorable macroeconomic environment will be essential for a sustained uptrend.

Key Resistance: 24,000, 24,500

Key Support: 22,800, 22,500

Strategy: Buy Nifty Futures on dips near the 23,250 level, with a stop-loss of 23,000 on a closing basis, for a target of 24,000 and 24,500 levels.

Chandan Taparia, Head Derivatives & Technicals, Wealth Management at Motilal Oswal Financial Services

This week, Nifty experienced a relief rally following last week’s strong bearish pressure. The index began the week on a cautious note, hitting a low of 23,047 on Monday. However, it managed to recover steadily over the next three sessions, climbing over 300 points. Despite this recovery, the momentum at higher levels remained weak, with Nifty struggling to gain significant follow-through buying. The index negated its pattern of lower lows, instead forming higher lows over the last three sessions. Now, it needs to cross and hold above the 23,350 zone for strength to regain toward the 23,500 and 23,700 zones, while supports are shifting higher to the 23,150 and 23,050 zones.

Key Resistance: 23,500, 23,700

Key Support: 23,150, 23,000

Strategy: Buy Nifty Futures on dips with support at 23,000 for an upside target toward the 23,500/23,700 zones.

Virat Jagad, Technical Analyst at Bonanza

Nifty is showing a bearish chart structure, forming a lower high and lower low pattern on the daily chart, signaling the dominance of bears. The recent breakdown from a symmetric triangle formation, with resistance around the 23,500 level, further highlights weakness. The RSI is positioned in the lower range, confirming declining momentum. These technical indicators collectively point to negative sentiment, suggesting the likelihood of continued downside movement in the near term.

Key Resistance: 23,450, 23,600

Key Support: 23,000, 22,700

Strategy: Sell Nifty Futures on a rally near the 23,400-23,450 level, with a stop-loss of 23,550, targeting 23,000.

Bank Nifty - Outlook and Positioning

Mandar Bhojane, Equity Research Analyst at Choice Broking

Bank Nifty has also faced significant selling pressure from its higher levels and has been trading consistently below its 200-day EMA. However, in the past three consecutive sessions, Bank Nifty has shown strength, closing in positive territory and creating a sense of optimism among buyers for the upcoming trading sessions. The RSI has reversed from its oversold zone and is currently at 39.30, trending upward, which indicates increasing buying momentum.

If Bank Nifty breaks the resistance level of 49,700, it could pave the way for a bullish rally toward 50,200 and 50,600 levels. In the event of a reversal, if Bank Nifty breaches the 48,800 support level, it could decline further to test the next support levels at 48,300 and 48,100.

Key Resistance: 50,200, 50,600

Key Support: 48,300, 48,100

Strategy: Buy Bank Nifty Futures on dips near the 48,900 level, with a stop-loss of 48,000 on a closing basis, for a target of 50,200 and 50,600 levels.

Chandan Taparia, Head Derivatives & Technicals, Wealth Management at Motilal Oswal Financial Services

Bank Nifty formed a small bullish candle on the daily scale as buying was seen at lower levels. Now, it needs to hold above the 49,000 zone for a bounce toward 49,500 and 50,000 levels. On the downside, support is seen at 49,000 and 48,750 levels.

Key Resistance: 49,500, 50,000

Key Support: 49,000, 48,750

Strategy: Buy Bank Nifty Futures on dips with support at 49,000 for an upside target toward the 49,500/50,000 zones.

Virat Jagad, Technical Analyst at Bonanza

Bank Nifty has broken its consolidation range, with a pullback testing the previous support level. A correction from this zone could trigger further downside momentum. The RSI is trending toward the midline, aligning with the ongoing pullback phase. Furthermore, the index remains below its key EMAs, reinforcing the prevailing bearish sentiment and signaling continued weakness in the trend.

Key Resistance: 50,000, 50,500

Key Support: 49,000, 48,500

Strategy: Sell Bank Nifty Futures on a rise near the 49,500 level, with a stop-loss of 50,000, targeting 48,500.