Bank Nifty Could Skyrocket to 52,300 Short-Term: Key Hurdles at 50,800-50,900, Says SBI Securities’ Sudeep Shah

After moving between 50,830 and 49,655 for the last nine trading sessions, the Bank Nifty might rebound from these levels, says Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research at SBI Securities.

“The zone of 50,800-50,900 will be the immediate hurdle for the index as 20- and 50-day EMA are placed in that region. Any sustainable move above the level of 50,900 will lead to a sharp upside rally up to the level of 51,700, followed by 52,300 in the short term,” said Shah.

Edited excerpts from a chat:

Nifty has been trading in the range of 24,000 to 24,400 levels for the past few days, and the index as well as RSI are range-bound. Is the range-bound movement likely to stay there for a while?

On August 5, the benchmark index Nifty hit a low of 23,894 and then began to make higher highs and higher lows. It ended the week above 24,500, showing a 1% gain. The weekly chart shows a bullish candle with a lower shadow, indicating positive momentum. The Nifty has reclaimed its 20-day EMA and surpassed over 50% of its previous downward move. The daily RSI at 55 is showing a bullish crossover, and the daily stochastic is also bullish. These factors suggest a positive outlook for the Nifty.

Bank Nifty is currently just sustaining above its 100 DEMA. If this support breaks, till where do you see the index dipping?

For the last 9 trading sessions, Bank Nifty has been fluctuating between 50,830 and 49,655. The index has found support near the 100-day EMA twice and then bounced back, which is a positive sign. If Bank Nifty stays above the 20- and 50-day EMA zone of 50,800-50,900, it could see a significant rally. However, if it drops below the 100-day EMA zone of 49,800-49,600, the next support levels are at 49,000-48,900.

On the monthly chart, the performance of Bank Nifty is still above its short-term EMA. Can we expect support from there, and the index might bounce back?

Yes, Bank Nifty is expected to rebound from current levels. On the monthly chart, it is trading above its short and long-term moving averages, which is a positive long-term sign. The weekly chart shows small body candles with long lower shadows, indicating buying interest at the 100-day EMA level. The immediate hurdle is at 50,800-50,900. A move above 50,900 could lead to a rally up to 51,700 and 52,300 in the short term.

With all the gap up and gap down, tracking Dow Futures and GIFT Nifty has suddenly become all the more important than ever. How should one take a call based on moves in GIFT Nifty before 9 am?

Global markets are interconnected, so monitoring international market movements is important even after local markets close. GIFT Nifty reflects global market trends outside of local trading hours. Significant price action in GIFT Nifty mainly occurs between 9:15 AM and 3:30 PM during local trading hours. While it provides insights into potential opening trends based on global developments, it does not predict market behavior beyond this.

How easy or tough is it to make money in a range-bound market for an options trader?

In a range-bound market, options traders can benefit from selling options and capturing premium decay as the asset’s price remains within a range. Strategies like covered calls or puts and range-bound spreads are effective. However, the potential for large profits is limited, and traders need to adjust their strategies frequently to handle sudden movements or false breakouts. Overall, a range-bound market offers steady gains but requires careful management to avoid losses.

For Nifty’s monthly expiry, maximum call writing is at 24,500, followed by 24,300, where the outstanding OI is decreasing, and then at 24,400. Given the data, do you see the index being able to regain the 25k mark in this series?

There is significant open interest for call options at the 24,600 and 24,800 strikes. On the put side, notable open interest is at the 24,500 and 24,400 strikes. The Straddle cost of the ATM strike suggests that the Nifty may trade between 24,770 and 24,250 in the near term.

Additionally, the gap between FII and DII holding is narrowing. What could one read from this data?

A narrowing gap between foreign institutional investors (FII) and domestic institutional investors (DII) indicates increasing local investor confidence as domestic investors are buying more while foreign investors are becoming more cautious. This shift suggests the market