Nifty Trading Plan

The Nifty 50 and Bank Nifty saw significant correction on December 17, as market participants turned cautious ahead of the outcome of the Federal Reserve policy meeting scheduled for December 18. If the Nifty 50 defends the 24,200 level (last week's low), a rebound towards 24,500-24,700 is possible. However, if it falls below this level, 24,000 will be a key level to watch. The Bank Nifty needs to find support at 52,300 (around the previous week's low); if it falls below this level, selling pressure may intensify. Conversely, above 53,150 (10-day EMA), buying interest may resume, experts said.

On Tuesday, December 17, the Nifty 50 plunged 332 points (1.35%) to 24,336, and the Bank Nifty declined 747 points (1.39%) to 52,835, with market breadth favoring bears. A total of 1,727 shares declined, compared to 795 shares that advanced on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Nifty index continues to show a bearish trend, failing to maintain momentum at higher levels, with every upward attempt being met with selling pressure. The index has slid below the crucial 24,500 mark, a key support level, and has also closed below its 20-day exponential moving average (DEMA), which has heightened caution among market participants.

Options data further reinforces the bearish sentiment, with significant Call writing observed between the 24,500 and 24,700 levels, establishing this range as an immediate resistance zone. Additionally, the RSI (Relative Strength Index) on the daily timeframe has dipped below the 50 mark, signaling waning buying momentum and a lack of bullish conviction.

The index is now trading near a pivotal level of 24,300, and a breach below this support could trigger additional selling pressure. As long as the index remains below the 24,500 resistance, sellers are likely to maintain control. A sustained move above 24,500 would be required to reignite buying interest and reverse the current downtrend. Notably, the Put-Call Ratio (PCR) has entered oversold territory, suggesting that a temporary bounce in the index cannot be ruled out, although the broader trend remains cautious.

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

Key Support: 24,350, 24,000, 23,900

Strategy: Traders can consider a Bear Call Spread strategy in Nifty by buying a 24,400 strike Call at Rs 92.10 and selling a 24,100 strike Call at Rs 280.85 for the December 19 expiry. In case of stop-loss, hold the strategy until expiry, with a maximum loss of Rs 2,781 on MTM, while on the target front, hold the strategy until expiry with a maximum profit of Rs 4,719, or book once MTM crosses Rs 3,000.

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

The Nifty has been moving with sharp swings in either direction. Prices over the past week have failed to close above the prior day's high, and even on the hourly chart, from the top of 24,792, there has not been a single close above the prior candle high, with the low above the prior low. This has kept the price action on the sell side. In summary, Nifty broke below the important support of 24,480 and formed a strong bearish candle on the daily chart. For now, a break below 24,260 could accelerate further selling pressure with targets of 24,180 or lower. On the upside, 24,530 is the nearest resistance.

Key Resistance: 24,880

Key Support: 24,180

Strategy: Short positions can be created below 24,260 with a stop-loss of 24,320, targeting 24,180 followed by 24,100 levels.

Preeti K Chabra, Founder, Trade Delta

The Nifty at 24,336 is consolidating between the high and low range of 24,857 (December 5) and 24,180 (December 13). Tuesday’s selling could be the result of indecisiveness before the US Federal Reserve meeting. On the derivative front, unwinding is happening in the In-The-Money (ITM) Puts (24,500, 24,600, 24,700) and writing of ITM Calls (24,300 and 24,200), suggesting bearishness. That being said, the Nifty Index is at an important level of 24,350, which is a conjunction of various important support levels on the weekly and daily time frames. Any opening below Tuesday's close of 24,330 could open the target for the Nifty to 24,180, which was the low of the high wave candle on December 13, with a second target of 24,050, which is the 50% retracement of the entire move of Nifty from the lows of Election Day.

Key Resistance: 24,530, 24,850

Key Support: 24,330

Strategy: Sell Nifty Futures below 24,330, with a stop-loss of 24,370, targeting 24,050.

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivative Research Analyst, Samco Securities

The Bank Nifty index has shown signs of diminishing bullish strength, closing below the critical psychological support level of 53,000. Attempts to rise have consistently met with selling pressure, reflecting bearish dominance. The index is now trading near its vital support zone of 52,700–52,600, and a breach below this range could trigger intensified selling activity. On the daily chart, the RSI has dropped below the 60 level, highlighting a decline in buying momentum.

Options data further supports this bearish outlook, with significant Call writing observed at higher strikes (53,000–53,500), indicating immediate resistance for the index in the coming sessions. As long as the index trades below 53,200, sellers are likely to maintain control, and any upward movements may serve as opportunities to initiate short positions. A decisive and sustained breakdown below the current support zone could accelerate a sharp downward move, driven by unwinding from buyers. Buying interest is expected to revive only if the index sustains above the 53,200 level. Until then, sellers are likely to remain in command, with the bearish tone persisting.

Key Resistance: 53,000, 53,500, 53,700

Key Support: 52,700, 52,300, 52,000

Strategy: Traders can consider a conditional sell of December futures below 52,850–52,800, with a stop-loss set above 53,050 and a target between 52,300–52,250.

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

The Bank Nifty formed a strong bearish candle and also closed below the previous day's low, signaling weakness. Currently, all eyes are on the US Federal Reserve's monetary policy outcome, as it will affect market sentiments. Prices are currently trading near an important price action area near the 52,580 level. A close below it will confirm a change in the daily trend to the negative side.

In summary, the overall Bank Nifty is at an important juncture. The price action over the next two days will help set the tone. For now, a break above 53,400 is necessary for fresh buying to emerge. On the downside, a break below 52,580 can resume selling, with targets of 52,180 or lower.

Key Resistance: 53,400

Key Support: 51,800

Strategy: Short positions can be created below 52,580 with a stop-loss of 52,980, targeting 52,180 followed by 51,800.

Preeti K Chabra, Founder, Trade Delta

The Bank Nifty at 52,834 closed below the slanting trendline drawn from the high of 53,888 and 53,655, suggesting bearishness in the index. We advise traders to take a sell-on-rise stance in Bank Nifty, as we continually see selling at higher levels in both Nifty and Bank Nifty. Additionally, the RSI is trading below the signal line. The suggested target is 52,300, which is an earlier support and the 61.8% retracement level.

Key Resistance: 53,738, 53,888

Key Support: 52,700, 52,300

Strategy: Sell Bank Nifty around the 53,500 zone with a stop-loss of 53,738, targeting 52,700 and 52,300.