Nifty and Bank Nifty Analysis and Trading Strategy for October 03, 2023

Nifty View:

The Nifty erased almost all the losses from the previous day. However, profit booking in the last hour wiped out the initial gains, resulting in the Nifty settling with a gain of 0.60%. The price action remained within the high and low of the prior trading session, forming an inside bar with a long upper shadow. Importantly, the index has given up 50 percent of the day’s gains but is back above the 50 DMA. The India VIX declined by 10.68%, returning to the 11.45 level, after a 10.68% increase on Thursday. Implied Volatility also declined significantly. Given the long weekend, most traders squared off their positions, leading to the last-hour decline. The index has formed an inside bar, indicating that it needs to break out of this range for a directional bias. There are chances that the index may trade sideways for 1-2 days before registering a breakout. Thursday’s range, 19492-766, serves as crucial support and resistance for now. The range breakout will determine whether the market will reverse or continue the trend. There is no change in the directional bias for now. As long as it trades below 19766, it remains negative. A move above the 20 DMA, also at a similar level of 19760, would be positive for the market. Until then, it is advisable to maintain a neutral bearish bias. 

Nifty 50 – Strategy for the Day:

The Nifty has formed a significant bearish candle in the last hour of trade. A move above the level of 19645 is positive, with a potential test of the level of 19705. Maintain a stop loss at the level of 19600. Above the level of 19705, continue with a trailing stop loss. However, a move below the level of 19600 is negative and can test the level of 19530. Maintain a stop loss at the level of 19645. Below 19530, continue with a trailing stop loss.

Bank Nifty View:

The Bank Nifty also formed an inside bar with very low volume, registering the lowest volume since August 21. The index continues to trade below the key moving averages, with a 0.71% gap below the 50 DMA and a 1% gap below the 20 DMA. The MACD line is below the zero line, indicating a lack of bullish momentum. On the weekly chart, it formed a Doji-like candle and closed below the previous week’s low, declining below the 61.8% retracement level of the prior upswing. The weekly MACD and RSI are in a bearish setup. On the upside, the Bank Nifty must move above the level of 44940 for a short-term positive bias, with a potential test of the level of 45305. However, on the downside, a move below the level of 44530 will be negative. It is advisable to stay on a neutral bias as long as it protects the previous week’s low. The Private Sector Bank index appears weak, as heavy-weight stocks have broken important support levels. 

Bank Nifty – Strategy for the Day:

The Bank Nifty has traded sideways and formed an inside bar, but the significant bearish candle formation in the last hour raises concerns. A move above the level of 44640 is positive, with a potential test of the level of 44810. Maintain a stop loss at the level of 44550. Above the level of 44810, continue with a trailing stop loss. However, a move below the level of 44550 is negative and can test the level of 44290. Maintain a stop loss at the level of 44640. Below the level of 44390, continue with a trailing stop loss.

 Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.