Nifty 50 and Bank Nifty Poised for Potential Recovery Amid Iran Conflict Tensions and Elevated Volatility

Market Update: Nifty 50 and Bank Nifty Face Resistance Ahead

The Indian stock market witnessed a sharp rebound on April 1, following a two-day sharp sell-off, but momentum indicators continue to validate the bearish construct. The Nifty 50 needs to witness follow-through buying interest in the upcoming sessions for a move towards the 23,000–23,200 zone, with 23,470 acting as a crucial hurdle for negating the bearish bias.

The Nifty 50 rose 348 points (1.56 percent) to 22,679 on April 1, while the Bank Nifty rallied 1,173 points (2.33 percent) to 51,449. Market breadth turned strong, with about 2,778 shares advancing against 228 declining shares on the NSE.

Nifty Outlook and Strategy

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Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, notes that the benchmark index, Nifty, witnessed a fierce sell-off during March, culminating in the formation of a large bearish candle on the monthly chart, underscoring the strength of the prevailing downtrend. The index has corrected by over 4,000 points, or more than 15 percent, highlighting the intensity and persistence of selling pressure.

The index is currently trading more than 9 percent below its 100-day and 200-day exponential moving averages, marking the sharpest deviation from these long-term averages in recent months. This wide gap clearly reflects the steepness, pace, and momentum of the recent decline, signaling meaningful technical damage.

Momentum Indicators Validate Bearish Construct

Momentum indicators continue to validate the bearish construct. The weekly RSI has slipped to 27.68 and remains in a declining phase, registering its lowest level since March 2020. Such deeply oversold readings reflect strong downside momentum and indicate that selling pressure continues to dominate market dynamics.

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Going ahead, the 22,900–23,000 zone is expected to act as immediate resistance for the index. A sustained move above 23,000 could pave the way for the next upside hurdle near 23,300.

Comparison of Nifty 50 and Bank Nifty

Bank Nifty Outlook and Positioning

Bank Nifty also snapped its two-day losing streak and formed a Doji candle on the daily chart, indicating indecisiveness among market participants. The index faced resistance near the 52,000 zone and failed to sustain at higher levels.

While the broader structure remains weak, a short-term pullback on the upside cannot be ruled out. Notably, Bank Nifty witnessed an aggressive rollover of 86.0 percent, significantly higher than 74.3 percent in the previous expiry, suggesting that a large number of short positions have been carried forward into the April series. This raises the possibility of a short-covering rally.

Comparison of Key Resistances

Strategies for Nifty 50 and Bank Nifty

• Buy Nifty Futures above 23,925, with a stop-loss of 23,650, targeting 24,450.
• Nifty Futures may be considered on the short side below 22,700, with a stop-loss near 23,050 and a downside target of 22,300.
• Buy Nifty 23,000 CE of April 7 expiry at Rs 190, with a stop-loss of Rs 160, targeting Rs 250.
• Buy Bank Nifty Futures above 52,400, with a stop-loss below 51,650, targeting an upside move towards 53,500.
• Buy Bank Nifty April Futures above 52,000, with a stop-loss of 51,700, targeting 52,500.