Nifty and Bank Nifty Analysis – September 25, 2023

Nifty Section:

The NSE benchmark Nifty 50 experienced one of the sharpest declines in recent times. On a weekly basis, the Nifty has formed the most bearish candle since June 2022 in terms of both points and percentage. This is also a substantial decline compared to February 2023, especially in terms of percentage. Throughout the trading sessions of the week, the Nifty consistently closed in the red, ultimately ending at the week’s low. The index has now dipped below the 20 DMA, indicating that mean reversion has been completed. As a result, we can anticipate a period of market consolidation. However, if the 50 DMA at 19626 and the prior breakout level of 19584 hold, we can expect this consolidation. On the upside, the level of 19900 is likely to act as a strong resistance. The gaps in the previous upside swing have been filled in the last three days, but there are still three open gaps from the last week of June. The RSI has declined below 50, and the MACD has generated a fresh bearish signal. Volumes were lower on Friday, and the index retraced more than 55% of the previous 11-day upside move. Given the two impulsive swings the Nifty has experienced, we should anticipate a cool-off period. Maintaining a smaller position size is now a key strategy, along with prudent risk and money management to safeguard capital and profits.

Strategy for the Day:

Considering the sharp decline in the Nifty last week, we may witness a pullback attempt. A move above the level of 19720 is positive, with the potential to test the level of 19780. Maintain a stop loss at the level of 19690. Above the level of 19780, continue with a trailing stop loss. However, a move below the level of 19680 is negative, and it may test the level of 19630. Below the level of 19630, continue with a trailing stop loss.

Bank Nifty Section:,

The Bank Nifty saw a sharp decline of 3.5% in the past week, with losses occurring in all trading sessions. Most of these losses were attributed to HDFC Bank. The index closed below both the 20 DMA and 50 DMA, as well as the moving average ribbon. Additionally, the MACD has issued a fresh sell signal, and the RSI has shifted from a strong bullish zone to a near bearish zone. It has also retraced more than 61.8% of the prior swing, with above-average volumes recorded for the last three days. This sharp decline has altered the price structure from strongly bullish to subdued. As long as it trades below the prior week’s high, it’s advisable to avoid aggressive long positions. We may anticipate a range between 44400-45000 in the next two to three days. If it closes above 45277, there may be an attempt to further move towards the gap level. There is a possibility of short covering in the coming days due to the monthly expiry, but the short-term sentiment remains in favor of bears.

Strategy for the Day:

The Bank Nifty has closed below all key support levels. A move above the level of 44770 is positive and could test the level of 44940. Maintain a stop loss at the level of 44680. Above the level of 44940, continue with a trailing stop loss. Conversely, a move below the level of 44605 is negative and may test the level of 44460. Maintain a stop loss at 44720. Below the level of 44460, 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.