The Nifty 50 and Bank Nifty both snapped a three-day winning streak and formed a bearish candlestick pattern on the daily charts, closing below all key moving averages last Friday. This indicates weakness. According to experts, the Nifty 50 is likely to remain in the range of 23,000-23,400 in the near term. A break below 23,000 could drag it down to the 22,800 level, while a decisive climb above 23,400 could push the index to 23,600, followed by 23,800. The Bank Nifty needs to hold above 48,500 for a move towards the 49,000-49,500 zone, but falling decisively below this level could drag the index down to 47,900 (around the low of last week).

On Friday, January 17, the Nifty 50 corrected 109 points to close at 23,203, while the Bank Nifty dropped 738 points (1.5%) to 48,541. However, the market breadth was slightly in favor of the bulls, with 1,296 shares advancing compared to 1,220 shares declining on the NSE.

Nifty Outlook and Strategy

Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One

The Nifty has experienced a breakdown below its November low and has also failed to make an initial attempt to rise above this level during the week, highlighting the importance of the breakdown neckline. In the meantime, the ‘Falling Wedge’ pattern on the daily chart indicates a nearby support zone in the 23,000-22,900 region for the upcoming week, necessitating careful monitoring.

Furthermore, the formation of a ‘Doji’ candlestick on the weekly timeframe indicates indecisiveness, with both parties likely seeking triggers to gain momentum. On the higher end of the spectrum, the neckline around 23,350, followed by the 23,500-23,600 zone, is expected to present intermediate resistance, potentially serving as barriers that the index may struggle to surpass in the near term.

On the options front, the 23,000-22,700 Put strikes and the 23,500 Call strike have witnessed a decent piling of open interest, indicating an intermediate trading range.

Key Resistance: 24,350, 24,500, 24,600

Key Support: 23,100, 23,000, 22,900

Strategy: Buy Nifty Futures on dips to around 23,000, with a stop-loss of 22,900, and book profits near 23,350-23,400.

Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities

The Nifty closed the last week with a loss of 228 points. On the weekly chart, the index has formed a "Doji" candlestick pattern at the critical support level of 23,000, signaling indecisiveness among market participants. This 23,000 level is crucial for determining the market's direction. A sustained hold above this support could lead to a reversal, while a decisive breach below it may accelerate downward momentum.

If the Nifty manages to surpass and maintain its position above 23,400, it is likely to attract buying interest, pushing the index towards 23,500–23,750. Conversely, a breakdown below 23,000 could increase selling pressure, dragging the index down to 22,800–22,600. With a mixed bias, Nifty is expected to trade within the 23,750–22,600 range in the upcoming week. Additionally, the weekly RSI (Relative Strength Index) continues to trend downward, remaining below its reference line, reinforcing the negative outlook.

Key Resistance: 23,350, 23,500

Key Support: 23,100, 22,850

Strategy: Buy Nifty Futures around 23,100, with a stop-loss of 22,950, targeting 23,350-23,450.

Ameya Ranadive, CMT, CFTe, Senior Technical Analyst at StoxBox

From a technical perspective, the RSI remains subdued at 36, indicating caution among traders. The weekly chart has formed a Doji candle, signaling indecision at current levels.

Key Resistance: 23,500, 23,750

Key Support: 23,000, 22,750

Strategy: To capitalize on the current setup, we recommend a Bull Call Spread strategy in Nifty by buying the 23,200 strike Call at Rs 184 and selling the 23,500 strike Call at Rs 58 for the January 23 expiry. This strategy requires a premium of Rs 34,805 with a maximum profit of Rs 13,054 and a maximum loss of Rs 9,446. The breakeven point stands at 23,326.

Bank Nifty - Outlook and Positioning

Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One

The broader trend across all time frames remains firmly bearish for the Bank Nifty, with some failed recovery attempts. On Friday, private banking heavyweights like Axis Bank and Kotak Mahindra Bank emerged as major contributors to the sell-off, erasing earlier gains. The inability of buyers to sustain the bullish gap created on Wednesday further underscores the strength of the bears.

Despite the technical outlook favoring sellers, the situation warrants a cautious and patient approach. Momentum chasing could prove risky in the current scenario. However, a decisive breakdown below last week’s low at 47,900, a crucial support level, could hand control to the bears and trigger a fresh wave of downward momentum. On the other hand, while a series of resistances are placed for buyers to negotiate higher, immediate resistance can be found around the psychological level of 49,000, followed by a stronger challenge at 49,500. On the options front, significant piling of open interest was seen at the 50,000 strike Call, indicating a crucial resistance zone.

Key Resistance: 49,000, 49,500

Key Support: 48,000, 47,900

Strategy: Buy Bank Nifty Futures around 48,000 with a stop-loss of 47,700, targeting 49,500.

Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities

The Bank Nifty closed the last week with a loss of 194 points. On the weekly chart, a small bullish candlestick with a long upper shadow has formed, indicating higher selling pressure. The index encountered resistance near the breakdown area at 49,700, which is likely to serve as a significant barrier in the coming weeks.

If the Bank Nifty crosses and sustains above 49,000, it could see buying momentum, potentially pushing the index towards 49,500 to 49,700. Conversely, if the index falls below 48,300, it may experience increased selling pressure, pulling it down towards 48,000 to 47,700.

For the upcoming week, Bank Nifty is expected to trade between 49,700 and 47,700 with a negative bias. Additionally, the weekly RSI remains in the negative zone, below its reference line, reflecting bearish sentiment.

Key Resistance: 48,800, 49,200

Key Support: 48,200, 48,000

Strategy: Sell Bank Nifty Futures near 48,800 with a stop-loss of 49,050, targeting 48,200.

Ameya Ranadive, CMT, CFTe, Senior Technical Analyst at StoxBox

Currently, the Bank Nifty is at a critical zone around 48,500, managing to close above this key level for the week. Historically, the 47,800-48,500 range has been pivotal, acting as both support and resistance during rallies and retracements over the past year.

Technically, the RSI remains weak at 34, showing no signs of recovery yet. The week ahead is expected to be volatile as earnings could significantly influence the index.

Key Resistance: 48,900, 49,600

Key Support: 47,800, 47,500

Strategy: Given the oversold conditions and the crucial zone, we recommend initiating a long position in Bank Nifty at 48,500 for targets of 49,200-49,500. However, this bullish view will be negated if the Bank Nifty sustains below 48,000.