Nifty and Bank Nifty Trading Strategy for October 12, 2023

Nifty View:

The Nifty closed above the 20-day moving average (DMA) and the 50% retracement level of the prior downswing. It recorded another gap-up opening and sustained. The index has registered a close above the two-week high. The volumes were lower than the previous day. The MACD line is almost at the zero line. If the index registers another positive closing, the MACD is likely to give a bullish signal. The RSI is at 55, and a move above 60 will confirm a further bullish move. The Nifty gained 505.60 points from the October 04 low. There are three gap-up and a gap-down opening from October 04. The positive gaps show bullish strength. But, the question is, will it cross the 19900 level? Wednesday’s strong move is limited to the first hour only. It traded mostly rangebound with high volatility. The momentum looks to be waning on a lower timeframe. Now, 19770 holds as a key support. In any case, if the index closes below 19770, it means the five-day pullback has ended. On the upside, 19883 will act as a strong resistance. The India VIX declined another 2.53% to 10.98, which is a caution for the ongoing upswing. Till then, it is better to maintain a neutral bias.

Nifty – Strategy for the day:

The Nifty traded sideways on an intraday basis. A move above 19834 is positive, and it can test 19890. Maintain a stop loss at 19790. Above 19890, continue with a trailing stop loss. However, a move below 19782 is negative and can test 19745. Maintain a stop loss at 19814. Below 19745, continue with a trailing stop loss.

Bank Nifty View:

The Bank Nifty has formed a small negative candle, although the index closed in positive territory. It tested the 50-day moving average (DMA) and closed at the previous day’s high but below the opening level. The volume was higher in the last four days, showing distribution. Since September 15, the Accumulation and Distribution line has been declining, indicating no buying interest. The RSI is near the 50 zone and above the prior minor high, showing a positive divergence. The MACD line also began to rise below the zero line and is above the monthly VWAP. There are at least three major resistances near the current price. The first resistance is at 44672 (50DMA), 44770 (Anchored VWAP), and 44840 (20DMA). The index will gain bullish strength only above this zone of strong resistance. On the downside, a close below 44480 will be negative and will resume the downtrend. The PSU Bank index shows signs of weakness. It is better to stay neutral below the 50DMA. A move above the 20DMA will give a good upside move.

Bank Nifty – Strategy for the day:

The Bank Nifty closed below the opening level. A move above 44560 is positive, and it can test 44750. Maintain a stop loss at 44480. Above 44750, continue with a trailing stop loss. However, a move below 44440 is negative and can test 44240. Maintain a stop loss at 44560. Below 44240, 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.