Nifty and Bank Nifty Analysis and Trading Strategy for October 04, 2023

Nifty View:

The Nifty formed an almost open-high candle on Tuesday. It dipped below last Thursday’s low on an intraday basis but managed to close above the 19,500 mark. The recovery was limited to less than 50% of the first hour’s bar. After the first hour, the Index traded in a range of less than a hundred points. Currently, the index is trading decisively below the 50 DMA, and this significant moving average is in a downtrend. Following a long weekend, the markets traded lower and struggled to hold the 19,600 mark. The Index breadth is negative. Considering the price action, the 19,500 level is now a make-or-break level. In any case, if it closes below this crucial support in the next two days, the Nifty could test the 19,230 level, a prior low. The RSI positive divergence on the hourly chart did not yield the expected results. The daily MACD line has closed near the zero line, and the Bollinger bands have further narrowed. On the upside, the index must close above 19,623 for a positive bias. The 20 DMA resistance is at 19,774, which will act as strong resistance for now. The India VIX, up by 2.93%, is a fresh caution for the bulls. Any further increase in VIX will impact the bullish bias.

Nifty – Strategy for the day:

Currently, the index is trading decisively below the 50 DMA, and this important moving average has entered a downtrend. A move below the 19,500 level is negative, and it could test the 19,430 level. Maintain a stop loss at 19,545. If it goes below 19,430, continue with a trailing stop loss. A move above the 19,555 level is positive, and it could test the 19,605 level. Maintain a stop loss at 19,500. If it goes above 19,605, continue with a trailing stop loss.

Bank Nifty View:

The Bank Nifty closed at the previous day’s low. Despite a 2.38% gain in the PSU Bank index, it did not help the index close in positive territory. Leading banks such as HDFC Bank, ICICI Bank, and Kotak Bank closed negatively, causing the Bank Nifty to lose its relative strength. It has been trading in the range of 44,180-44,755 for the last four days. A breakout on either side will provide a decisive directional bias. The 20 DMA is in a downtrend, and the Bollinger bands are moving horizontally. Tuesday’s decline occurred with higher volume compared to the previous day. The Stochastic RSI is attempting to emerge from an oversold condition. If the Bank Nifty can protect the 44,180 support zone, we may witness a pullback towards the 50 DMA. The RSI is hovering around the 40 support level and is poised to enter the bearish zone. In these conditions, it’s advisable to maintain a neutral to bearish bias.

Bank Nifty – Strategy for the day:

The Bank Nifty traded in a narrow range following the initial-hour decline. A move below the 44,325 level is negative, and it could test the 44,180 level. Maintain a stop loss at 44,435. If it goes below 44,180, continue with a trailing stop loss. A move above the 44,435 level is positive, and it could test the 44,615 level. Maintain a stop loss at the level of 44,325. 

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.