Nifty Trading Plan

The Nifty 50 closed the rangebound session on a flat note on December 10, continuing its downtrend and lower highs formation for the third consecutive session. Experts expect the index to remain in the range of 24,800–24,500 in the upcoming sessions. If the index decisively breaks 24,500, selling pressure cannot be ruled out, with 24,300 being the immediate support. However, on the higher side, a break above the 24,700–24,800 zone could drive the index towards 25,000, experts said. The Bank Nifty is expected to find support around 53,300, and below that, the 53,000–52,800 zone is the key to watch. On the higher side, the hurdle is placed around the 53,800–54,000 area.

On Tuesday, December 10, the Nifty 50 declined by 9 points to 24,610, while the Bank Nifty outperformed the Nifty 50, rising by 170 points to 53,578. A total of 1,281 shares declined, compared to 1,230 shares that advanced on the NSE.

Nifty Outlook and Strategy

Preeti K Chabra, Founder of Trade Delta

The Nifty at 24,610 consolidated between the high and low range of 24,857 and 24,295, respectively, made on last Thursday's candle. The Nifty is forming a lower high and lower low candle formation for the last three trading days. If we closely examine the option chain of the Nifty, we can observe that there is unwinding happening in the In-the-Money (ITM) Puts (24,700, 24,750, 24,850, 25,000), suggesting bearishness in the index. However, the Nifty Index has taken support at the 78.2% retracement level of 24,510, which is Tuesday’s low. We advise traders to take a bearish position below 24,510, with an immediate target of 24,400 (50-day EMA), followed by 24,295 (20-day and 100-day EMA), and the low of December 5, while keeping a stop-loss at 24,678.

Key Resistance: 24,678

Key Support: 24,510

Strategy: Sell Nifty Futures below 24,510 with a stop-loss at 24,678, targeting 24,400, followed by 24,295.

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

In the previous session, the Nifty formed a neutral candle on the daily chart. On the hourly chart, the Nifty has already given a breakout of the Inverted Head and Shoulders pattern on the upside, with the final target near the 25,500 level. Additionally, the Nifty currently looks to have formed a Flag and Pole pattern, and a breakout is awaited on the upside. A break above 24,680 will confirm the breakout, which is needed for positive momentum to continue. Thus, the Nifty is at a crucial juncture. A break above 24,680 is needed for the uptrend to resume with targets of 24,880 or higher. On the downside, a breach below 24,480 would raise concerns.

Key Resistance: 24,880

Key Support: 24,480

Strategy: Long positions can be created above the 24,680 level with a stop-loss at 24,600, targeting 24,760, followed by 24,880.

Om Mehra, Technical Analyst at Samco Securities

The Nifty has stayed in consolidation mode for the last three sessions, hovering above the critical support level of 24,500. The resistance around 24,800–24,850 remains robust. The India VIX volatility check is still under control, staying below the 14 level. A short-term retreat to the 24,500 zone would offer a perfect opportunity to re-enter. More bullish momentum could be fueled by a breakout above 24,770. If 24,470 is not sustained, it could drive the index lower and lead to profit booking.

On the options front, the highest open interest is observed at the 24,500 Put option, indicating that 24,500 is likely to act as a key support level. Conversely, the 24,700, followed by the 24,800 Call option (CE), has the highest open interest, suggesting that 24,800 will act as a short-term resistance level.

Key Resistance: 24,750, 24,800

Key Support: 24,450, 24,500

Strategy: Traders are advised to use the Bull Call Spread strategy by buying the 24,600 strike Call at Rs 113.4 and selling the 24,800 strike Call at Rs 46 of the December 12 expiry. The maximum loss is Rs 1,685, the maximum profit is Rs 3,315, and the breakeven point is 24,668.

Bank Nifty - Outlook and Positioning

Preeti K Chabra, Founder of Trade Delta

The Bank Nifty consolidated between a high of 53,888 and a low of 52,850 last Thursday. For the last four trading sessions, it has formed a narrow range pattern (NR4), suggesting indecisiveness and compression happening in the index. This pattern indicates that the index could give a volatile move on either side.

Key Resistance: 53,625

Key Support: 53,302

Strategy: Buy Bank Nifty Futures above 53,625 (Tuesday’s high) with an immediate target of 53,888, keeping a stop-loss of 53,302. Alternatively, sell Bank Nifty Futures below 53,302 (Tuesday’s low) with a target of 53,000 (78.6% retracement level), followed by 52,850, keeping a stop-loss at 53,625.

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

Since November 29, not a single candle has closed below the previous day’s low, which keeps the medium-term outlook for the Bank Nifty positive. The index has been consolidating at the higher end of the 53,200–53,870 range over the last three sessions. As prices are moving in a tighter range, a triangle pattern has formed on the shorter time frame. Therefore, a breakout above 53,870 is necessary for fresh buying to emerge. Overall, the Bank Nifty is consolidating in a tight range. A breakout on the upside, above 53,870, is crucial for positive momentum to continue. On the downside, 53,200 is the crucial support level.

Key Resistance: 54,500

Key Support: 53,200

Strategy: Long positions can be created above 53,870 with a stop-loss of 53,480 and a target of 54,250, followed by 54,500.

Om Mehra, Technical Analyst at Samco Securities

After a period of strong momentum, the Nifty Bank has entered a consolidation phase, yet it remains above the previous resistance level of 53,400. The formation of higher highs and higher lows indicates sustained bullish momentum. A short-term correction could present a buying opportunity. The Nifty Bank is holding above the 9- and 20-day EMAs and the weekly chart continues to show strength. Sustaining above 53,800 could push the index higher. Both the weekly and daily RSI remain above the 60 level. The momentum is further supported by heavyweights from both private and public sector banks.

On the options front, the highest open interest is observed at the 53,000 Put option (PE), indicating that 53,000 is likely to act as a key support level. Conversely, the 54,000, followed by the 54,500 Call option (CE), has the highest open interest, suggesting that 54,500 will act as a short-term resistance level.

Key Resistance: 54,100, 54,500

Key Support: 52800, 53000

Strategy: Traders are advised to use the Bull Call Spread strategy by buying the 53,400 strike Call at Rs 811 and selling the 54,500 strike Call at Rs 317 of the December 24 expiry. The maximum loss is Rs 7,409, the maximum profit is Rs 9,091, and the breakeven point is 53,894.