Nifty 50 and Bank Nifty Trading Outlook: Range-Bound Markets Amid Key Technical Levels

Market Outlook: Nifty and Bank Nifty Expected to Remain Range-Bound

The Indian stock market may extend its previous day's recovery amid range-bound trading, but the sustainability of those gains will be key to watch. According to experts, the Nifty 50 is likely to face resistance in the 23,800–23,900 zone, and only a decisive move above it can trigger a rally towards 24,000–24,100. However, support is placed at 23,400–23,300.

On May 18, the Nifty 50 rose 6.5 points to 23,650, while the Nifty Bank fell 173 points (0.3 percent) to 53,537. Market breadth remained dominated by bears, with about 2,223 shares under pressure compared to 768 advancing shares on the National Stock Exchange.

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Nifty Outlook and Strategy

The Nifty index has broken below the key support level of 23,800, weakening the near-term chart structure. Going forward, the 23,800–24,000 range is expected to act as a strong resistance zone. Bears are likely to remain in control as long as the index trades below 24,000.

Technical Analysis

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The Nifty IT index appears highly oversold and may bounce back due to short covering. Similarly, the Bank Nifty may also recover from current levels, thereby protecting the lower end of the range. However, some profit booking at higher levels cannot be ruled out. Hence, the overall trend is likely to remain sideways within the 23,000–24,300 range.

Strategy

• Buy Nifty Futures on dips near 23,500, with a stop-loss at 23,290, targeting 24,000 and 24,350.
• Buy Bank Nifty Futures at CMP, with a stop-loss at 52,750, targeting 55,000–56,000.

Market Sentiment

FIIs also turned bullish last week, with nearly 20,000 short contracts covered in index futures. They also turned positive in the equity cash segment during the last two sessions of the previous trading week. The India VIX has been facing resistance near the 20–21 range. Hence, based on these observations, the index is likely to trade with a sideways-to-positive bias as long as the 23,300 level remains intact.

Outlook and Positioning

The Bank Nifty also recovered sharply from its intraday lows and managed to close well above the 53,000 level. This remains a crucial support level on a closing basis, as holding above it keeps the possibility of short covering alive up to the 56,000–57,000 zone. The banking index has filled its gap on the lower side and also retraced 61.8 percent of its previous rally, making a strong case for a recovery as long as the recent swing low remains intact.

Strategy

• Buy Bank Nifty Futures at CMP, with a stop-loss at 52,750, targeting 55,000–56,000.

Technical Analysis

Bank Nifty has currently reversed from a key technical support zone near 52,800–52,700, which coincides with the 61.8 percent retracement of the April rally. Adding further significance, an equal-leg AB=CD pattern is also placed around the same region, indicating a strong support cluster.

Strategy

• Buy Bank Nifty Futures in the 53,700–53,500 zone, with a stop-loss at 52,800, targeting 55,000.

Outlook and Positioning

The Bank Nifty index broke below the key support zone of 54,200–54,350 last week, bringing bearish momentum back into play. This earlier support area is now expected to act as a resistance zone, and any pullback towards this range could present a selling opportunity.

Strategy

• Sell Bank Nifty Futures at CMP or on a bounce towards 54,350. A stop-loss should be placed at 55,720 on a closing basis, while the downside targets are 52,800 and 51,500.