JAIPUR: Indian equity markets remain volatile ahead of the monthly F&O expiry, with both Nifty and Bank Nifty currently trading within a defined range. Selling pressure at higher levels, rising short positions among foreign investors and elevated crude oil prices continue to weigh on market sentiment. However, technical momentum indicators are showing some improvement, raising the possibility of a stronger move if key resistance levels are decisively breached.
According to Jai Thakkar, Vice President and Head of Derivatives & Quant Research at ICICI Securities, the 24,000-24,500 range remains crucial for Nifty. If the index sustains above 24,300, it could move towards 24,400 and subsequently 24,500. On the downside, a break below 24,100 could increase selling pressure towards the 24,000 mark.
24,000 Remains a Crucial Support for Nifty
Nifty closed lower last week and also remained under pressure during the first trading session of this week. This indicates that selling pressure at higher levels has not completely disappeared. At the same time, derivatives data shows significant Put Open Interest at the 24,000 strike, making it an important support level for the index.
On the upside, 24,500 remains the key resistance. Unless Nifty decisively breaks out of this range, the market is likely to remain sideways.
If Nifty sustains above 24,300, the index could move towards 24,400 and 24,500. Conversely, a break below 24,150-24,100 could push the index back towards 24,000.
Nifty Trading Strategy
According to Jai Thakkar's trading setup, traders can look for buying opportunities on dips in Nifty futures. An entry around 24,100 may be considered, with a stop loss below 23,950. The upside targets remain 24,400 and 24,500.
- Buy: Around 24,100
- Stop Loss: Below 23,950
- Target 1: 24,400
- Target 2: 24,500
- Major Support: 24,000
- Major Resistance: 24,500
Bank Nifty Remains in the 57,000-58,000 Range
Like Nifty, Bank Nifty is also trading within a defined range. On the upside, the 58,000 strike has the highest Call Open Interest, making it an immediate resistance level. Above this, 58,500 remains an important swing resistance.
On the downside, 57,000 is the key support for Bank Nifty. The strike has the highest Put Open Interest, making it an important near-term support. If this level breaks, the index could move towards 56,700 and subsequently 56,000.
Based on this setup, Bank Nifty's short-term range is 57,000-58,000, while its medium-term range is 56,000-58,500.
50-Day EMA at 57,235 Remains Important
The 50-Day EMA near 57,235 is another important technical level for Bank Nifty. If the index manages to hold this support, the possibility of a recovery remains intact.
However, sustained weakness below this level could drag Bank Nifty towards 57,000-56,700. On the upside, a move above 57,900 could take the index towards 58,250.
A decisive breakout above 58,000 could further strengthen the bullish momentum.
Bank Nifty Trading Strategy
According to Jai Thakkar, traders can consider buying Bank Nifty futures above 58,000, with a stop loss below 57,000 and a target of 60,000.
- Buy Above: 58,000
- Stop Loss: Below 57,000
- Target: 60,000
- Resistance: 58,000 and 58,500
- Support: 57,000
Short Covering in Banking Stocks Could Trigger a Sharp Move
The banking sector is also showing stock-specific trends. The PSU Bank index continues to trade with a weak bias, with significant short positions built up in the segment. In contrast, private-sector banks have performed relatively better over the past few trading sessions.
Apart from Axis Bank and HDFC Bank, several private-sector banking stocks have shown comparatively stronger performance. If short covering emerges across banking stocks, Bank Nifty could witness a sharp breakout.
In such a scenario, the index could move towards 60,000 or above.
FII Positioning Remains a Key Concern
Foreign investor positioning in the derivatives market is another important signal. As of last Friday, overall market rollover stood at around 40%. Meanwhile, amid weakness in Nifty, FIIs' net index short positions increased from approximately 1.5 lakh contracts to 2.10 lakh contracts.
This indicates that FIIs may be increasing their index short positions or rolling their existing shorts into the next expiry. Therefore, traders need to remain cautious at higher levels until a decisive breakout emerges.
India VIX and Crude Oil Also in Focus
Although India VIX is trading at relatively lower levels, it has witnessed intraday spikes over the past few trading sessions. With the monthly F&O expiry approaching, volatility could increase further.
Elevated crude oil prices are another factor that could influence market sentiment. If crude prices remain high, inflationary pressures could increase, potentially keeping equity markets under pressure at higher levels.
Aurelius Business View: Range Trade for Now, Breakout Will Set the Next Direction
Aurelius Business View: The current market setup suggests that both Nifty and Bank Nifty are still more range-bound than trend-driven. Therefore, ahead of expiry, traders may need to focus on key support and resistance levels rather than taking aggressive directional bets without confirmation.
For Nifty, the 24,000-24,500 zone remains the most important range. A dip towards 24,100 could provide a buying setup, provided the downside risk is controlled with a stop loss below 23,950. On the other hand, sustained strength above 24,300 could strengthen the bullish momentum and open the way towards 24,500.
For Bank Nifty, the 57,000-58,000 range is likely to remain decisive. A breakout above 58,000 could trigger short covering and potentially take the index towards 60,000. Conversely, a break below 57,000 could weaken the bullish setup and bring 56,700-56,000 into focus.
Overall, the current setup favours a "Buy on Dips, but with Confirmation" approach. However, volatility can rise sharply around expiry, making disciplined position sizing and stop-losses particularly important.
Key Levels to Watch for Nifty and Bank Nifty
| Index | Support | Resistance | Bullish Trigger | Downside Trigger |
|---|---|---|---|---|
| Nifty | 24,000 | 24,500 | Above 24,300 | Below 24,100 |
| Bank Nifty | 57,000 | 58,000-58,500 | Above 58,000 | Below 57,000 |
What Should Traders Watch Now?
For Nifty, 24,300 is likely to remain the key level to watch in the near term. A sustained move above this level could pave the way for a test of 24,500, while a break below 24,000 could increase selling pressure.
Similarly, Bank Nifty's 58,000 level could determine the next major move. A breakout above 58,000 could bring the 60,000 target into focus, while a break below 57,000 could increase downside risks towards 56,700-56,000.
Overall, the market remains range-bound and is waiting for a decisive breakout or breakdown. For traders, monitoring these key levels and entering positions only after confirmation could be crucial, particularly during the expiry week.
