Nifty and Bank Nifty Analysis and Trading Strategy for October 06, 2023

Nifty View:

As we expected, Wednesday’s late afternoon recovery continued. The Hammer or dragonfly doji candle received confirmation for the short-term pullback. Now, the level of 19457 has become an important support for the market. On the upside, the 50 DMA of 19607 is the immediate target and resistance. Above this, the index can test the 20 DMA at 19766 and the 50% retracement level of the prior down move, which is at a similar level, 19778. As the weekend is approaching, we may see more sideways action around the 50 DMA. As we suspected, the positive divergence in the RSI also helped the market recover from the low. Today, the recovery is led by IT and Auto stocks, and all heavyweight stocks contributed to the market’s recovery. Global markets closed positively, and the sentiment remains positive for now. However, there are several concerns about the market’s direction. Starting next week, the earnings season will begin. Poor earnings could dampen sentiment, while impressive earnings growth could boost the rally to a new high. The VIX is below 11, which is another warning sign for the market. Overall, stay cautious over the weekend and avoid aggressive position sizes.

Nifty 50 – Strategy for the day:

The Nifty closed positively but traded sideways during the day and showed a loss of bullish momentum. A move above 19560 is positive, and it can test 19625. Maintain a stop loss at 19520. Above 19625, continue with a trailing stop loss. However, a move below 19520 is negative, and it can test 19460. Maintain a stop loss at 19560. Below 19460, continue with a trailing stop loss.

Bank Nifty View:

The Bank Nifty filled the previous day’s gap but failed to sustain at higher levels. It formed a shooting star-like candle. The Bollinger bands widened again, indicating potential wild swings. Although it closed above the previous day’s high, the price pattern does not look great. It is still below all the key moving averages. Even on the hourly chart, the index failed to close above the moving average ribbon. The hourly RSI faced resistance at 55. Today’s high of 44392 and 8EMA of 44439 will be the immediate resistance zone. Above this resistance zone, it can test the 50DMA of 44791. In any case, a close below Thursday’s low of 44108 indicates that the downside move will resume. The daily RSI bounced above the 40 zone but needs to close above 46 for a strong pullback. The MACD and Signal lines are below the zero line, indicating bearish momentum. It is better to stay neutral and cautious on both sides.

Bank Nifty – Strategy for the day:

The Bank Nifty formed a shooting star candle, which does not inspire confidence to go long. A move above the level of 44265 is positive, and it can test 44427. Maintain a stop loss at 44145. Above 44427, continue with a trailing stop loss. However, a move below 44145 is negative, and it can test 43960. Maintain a stop loss at 44225. Below 43960, 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.