Buy Or Sell : As the trading week draws to a close, the Nifty index closed at 25,356 that is very close to an area of critical resistance that is at 25,500. The market has clearly been trending northward ever since the close above significant support level 24,600 clearly suggested so. An up move was only but of little surprise against the backdrop of previously oversold markets, and the pullback rally has since fueled the chances of rebounds across the indices, be it the Nifty index or the Bank Nifty. Now, on everyone’s mind: should one buy, sell, or hold?
Nifty Index Review: Resistance Level in Focus
The Nifty index has had a somewhat volatile week, swinging between 24,800 and 25,500. Of late, while volatile, the index has been showing a consistent closing above the very crucial support level of 24,600, which has left many traders and investors feeling that the upward momentum may go on. Going into next week, market observers are keenly watching if the index could breach the 25,500 resistance level.
The major point of the week is that the market has been in a tight consolidation range. All but nearly three weeks of sideways action, the index has now broken up to the upper limit of its range; it could be setting up for some kind of big move. If it breaks above 25,500, the anticipation could be new highs, but failing to maintain support at 24,600 could reverse gains.
How Was Nifty for the Week?
The trading week began with a gap down, shock waves to the investor’s confidence during the opening of Monday. Nifty index tested its support levels and fell as low as 24,600 to 24,800 before it staged the much-needed recovery towards the end of the week. Friday saw the index able to rebound back to the 25,500 level, which is quite tremendous recovery from the fall during the early weeks of trading.
The shock factor this week was a case of index-volatile behavior, caused by a mix of global economic and stock-specific movements. Even with such erratic patterns, the index maintained a range between 24,800 and 25,500, which is quite clear that the market is waiting for a breakout-in either upward or downward direction.
The sentiment for the overall market on the back of global events, particularly the decision by the Federal Reserve on interest rates, could be very much influenced by external factors. For now, traders have been advised to hedge their position or even go ahead very cautiously in new trades set up, as macroeconomic changes could induce uncertainty.
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Buy Or Sell : Support and Resistance Levels to Keep an Eye On
For the Nifty follower, the coming days will be all about seeing support and resistance. Presently, the close level of 24,600 has acted as a firm support zone. If it is sustained above this level, the bullish sentiment may continue. Any slide below this, though, may trigger sharp correction.
Other key resistance zone is due around 25,500. Above that, a new rally might be poised, and the next significant resistance should likely come around 26,000. However, a rejection there may form a sell-off that may take the index down to 24,600 or lower.
Bank Nifty. Resistance expected around 52,000
While the Nifty index witnessed a eventful week, Bank Nifty was certainly not one to be outdone. The vital banking index opened with a gap down on Monday and tested its critical support level at 50,000. But, just like that with Nifty, the banking index rebounded at week’s end and closed above the 51,000 support level and at the door step of the key resistance point of 52,000.
On the weekly chart, after breaking the trend line resistance, we feel that if it manages to carry above 52,000 levels in the next few sessions, then it should continue its move northwards. At 52,000, Bank Nifty feels it is facing tremendous resistance. If that breaks, then there would be an open rally towards 53,500.
Support for Bank Nifty is seen around 49,500, so it would do well to stay above that level so that the index does not take a bearish turn. With technical indicators being where they are right now, Bank Nifty seems very ready to move up, but will it close above 52,000 and stay above that in the next week? Market Sentiment: Are We Still in a Bullish Phase?
While the early-week volatility could have forced Nifty and Bank Nifty to close below their respective intraday support levels, the decisive nature of closing them above support levels would continue to dominate the market with a bullish undertone. Till then, the markets would remain in wait and watch mode primarily due to global factors like the Federal Reserve’s rate decision.
Technically, the bull trend is still intact for Nifty, with the provision that the index stays above the support level of 24,600. A breakout above 25,500 would further consolidate this trend and would leave scope for new highs in the immediate future. But in case it fails to break above this resistance zone, then it might just result in another consolidation phase or possibly a pull back.
Main Takeaways to Traders and Investors
The support and resistance levels identified above would form the focus for any trader. Keeping an eye on the performance of Nifty and Bank Nifty around these key levels would give very important clues about the direction that the market would subsequently take.
Levels to Watch: Support for Nifty, for now, is at 24,600. Bank Nifty’s supporting hand is at 49,500. A break below either of them may lead to a sell-off or an even more aggravated correction.
Resistance Levels to Watch: Nifty will find immediate resistance at around 25,500 levels. Further resistance would come at 26,000 levels. In the case of Bank Nifty, immediate resistance is at around 52,000 levels and then at 53,500 levels.
Macro Events: Traders will have to keep their eyes closely glued to the happenings of macro events, especially rate decisions by the Federal Reserve, as that could have the potential to affect markets across the globe, even in India.
Trading Strategy for Next Week
Caution will be best taken into the next week, especially in light of the volatility that has held the market lately. Highly exposed needs hedging positions, while anybody looking to start fresh should exercise some care.
Above 24,600 support levels this would be the key to capturing that potential up move in Nifty. On the upside, a break above 25,500 can easily turn out to be a buying opportunity as an uptrend continues.
For Bank Nifty, one needs to look out for a breakout above 52,000; if the index manages to break this hurdle, then it can gain till 53,500 and beyond. However, if it fails to break 52,000 and instead collapses below 51,000 support, one must be careful and ponder about reducing exposure or even taking profits.
Conclusion: What’s Next?
So far, Nifty and Bank Nifty have had a resilient week despite the drubbings of the session. Indices have closed above important support levels with a fairly good sense that overall market sentiment is still bullish. Even then, one should be careful with his or her trades and especially the global economic scenario is bringing in more volatility in the subsequent sessions.
Now, for Nifty, it will be a decisive test if it breaks above 25,500. If it happens, then one should expect it to carry interest further near-term. For Bank Nifty, holding above 51,000 would be critical, and its break above 52,000 would be essential.
The market is in a delicate state and, on the same breath, it is both positive and negative. If one monitors key support and resistance levels together with other worldwide happenings, then traders could be better prepared for the remaining weeks.