Nifty Trading Plan

The market took a pause and remained rangebound throughout the session after the recent strong rally, closing moderately lower on November 26. The Nifty traded in the range of 24,100–24,350 for another session. On the upside, if the index decisively climbs above 24,350, the upward journey towards 24,550 could be possible. However, below 24,100, 24,000 will act as a key support level. The Bank Nifty needs to defend 52,000 for a rally towards 52,550–53,000. However, breaking below 52,000, the 51,700 level can act as a support zone, followed by 51,500, according to experts.

On Tuesday, November 26, the Nifty 50 fell 27 points to 24,195, while the Bank Nifty declined 16 points to 52,192. Despite the declines, the market breadth remained positive. About 1,437 shares gained, while 1,042 shares declined on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivatives Analyst at Samco Securities

The Nifty index displayed muted momentum, hovering close to its immediate resistance zone of 24,400–24,500. The index remained rangebound within its previous session’s levels, creating a critical juncture where a breakout in either direction will establish the trend for the upcoming sessions. As long as the index stays above the 24,100–24,050 support band, the advantage is with buyers. A breakout above 24,500 could trigger significant short-covering, fueling upward momentum. On the other hand, failure to sustain above 24,100 might lead to heightened selling pressure, amplified by the presence of an unfilled gap, potentially driving intense profit booking. Options data reflects a balanced tug-of-war between bulls and bears, reinforcing the likelihood that a decisive breakout will dictate the index’s trajectory.

With the index positioned at a pivotal turning point, where a move on either side could define the trend, adopting a “Long Straddle” strategy is advised. This approach allows traders to capitalize on anticipated volatility and benefit from a sharp directional move, regardless of the breakout direction.

Key Resistance: 24,500, 24,800, 25,000

Key Support: 24,150, 24,000, 23,900

Strategy: Traders can consider a Long Straddle strategy in Nifty by buying a 24,200 Call strike at Rs 109 and buying a 24,200 Put strike at Rs 103 for the November 28 expiry. In case of stop-loss, hold the strategy till expiry, with the maximum loss being Rs 4,675 of MTM. In the case of the target, hold the strategy till expiry, and the maximum profit is Rs 27,825, or book once MTM crosses Rs 5,000.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

The rangebound move after the strong moves on November 22 and 25, is expected, as the Average True Range (ATR), which measures the size of candles and is also a proxy for volatility, is currently trading near the 320 level. This indicates that, on average, the Nifty 50 is moving by 320 points daily, which is a significant swing. To digest the move, it is expected that the index will consolidate, resulting in smaller price movements and a reduction in volatility.

Overall, the undertone for Nifty has turned to buy on dips, as long as the gap area near 23,920 remains intact. On the upside, 24,360 is likely to act as an immediate hurdle. Over the near term, we can expect rangebound movement between 24,360 and 23,920 before a trending move emerges. During such times, forming a Bull Call spread seems to be a better strategy to benefit from an upward move and cooling ATR readings.

Key Resistance: 24,360

Key Support: 23,920

Strategy: Use dips towards 24,103 as a buying opportunity, with a target of 24,280 followed by 24,360 levels, as long as 23,980 (stop-loss) holds on the downside.

Preeti K Chabra, Founder of Trade Delta

Tuesday's high of 24,343 and Monday's high of 24,351 coincide with the 61.8% Fibonacci Retracement of the entire run of the Nifty from the lows of the Lok Sabha election day results in June 2024. Nifty seems to be taking a breather on the upside, and a fresh long view is only valid above 24,350, as that level also coincides with the 20 EMA (Exponential Moving Average) on the weekly chart of Nifty. However, on the downside, Nifty took support around the 200 EMA, which is 23,555 on the daily chart, so the downside seems capped. The immediate support is at 24,038, which is the 20 EMA and the low (around 24,100) of November 22 and 25. Resistance is at 24,350. In this scenario, selling straddles or strangles in the Nifty with hedges seems to be a good strategy.

Key Resistance: 24,350

Key Support: 24,100, 24,040

Strategy: Sell 1 lot of Nifty 24,200 Call at Rs 119.25, sell 1 lot of 24,200 Put at Rs 100.15, buy 1 lot of 23,950 Put at Rs 31.45, and buy 1 lot of 24,450 Call at Rs 29.2. Break-even levels are 24,042–24,358, while the maximum loss is Rs 2,281, and the maximum profit is Rs 3,969. If the market breaks the support of 24,038 or resistance of 24,350 with a decisive candle in the 15-minute timeframe, the strategy should be exited.

The graphical representation or the payoff chart of the strategy is below given

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivatives Analyst at Samco Securities

The Nifty Bank index has demonstrated greater resilience compared to the benchmark Nifty, currently trading near its critical resistance zone of 52,500–52,600. This level, reinforced by concentrated Call-writing activity, has posed a significant barrier since early October. A decisive and sustained breakout above this resistance could ignite a robust upward move, fueled by a short-covering rally. On the downside, the index has established a strong support base near the 52,000–51,700 range, where Put writers have firmly positioned themselves. As long as the index holds above this support, buyers are expected to maintain dominance.

However, a breach below 51,700 could lead to intensified selling pressure, potentially dragging the index toward the next support levels at 51,300–51,000.

Given the index’s bullish setup and proximity to a crucial breakout zone, a “Conditional Long Future” strategy is recommended to leverage the current market scenario. Sustaining above the 52,000 support level is likely to pave the way for further upside, offering buyers a chance to reinforce their positions and capitalize on emerging opportunities.

Key Resistance: 52,500, 53,000, 53,300

Key Support: 52,000, 51,700, 51,500

Strategy: Traders can consider a Conditional Buy of December futures above 52,400–52,450, with a stop-loss below 51,980 and a target between 53,000–53,100.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

Overall, the Bank Nifty is building up positive momentum. Recently, the MACD (Moving Average Convergence Divergence) has shown a bullish crossover on the daily chart, but for confirmation, follow-up buying is needed. For now, a decisive breakout above 52,600 is needed to confirm the trend change, with targets of 52,900, followed by 53,200. Overall, the Bank Nifty is at a deciding point. A breakout of the consolidation can extend this rise to 52,900 or higher. On the downside, 51,700 is the nearest support level to watch.

Key Resistance: 53,200

Key Support: 51,700

Strategy: Long positions can be created above 52,350 with a stop-loss of 52,000 and a target of 52,600, followed by 52,800.