Nifty 50, Bank Nifty Face Test of Buying Resolve Amid Escalating Global Tensions

Market Needs Follow-Through Buying for Sustained Rebound Amid Ongoing West Asia War

The Indian stock market witnessed a sharp recovery last Thursday, driven by short-covering, but the sustainability of this rebound depends on follow-through buying in the upcoming sessions. The Nifty 50 is likely to face resistance at 22,800–22,900, followed by 23,000 as a crucial hurdle. However, failure to sustain could bring the index toward the immediate support zone of 22,500–22,450, followed by 22,200 as critical support.

Market Performance on April 2

On April 2, the Nifty 50 climbed 34 points to 22,713, while the Bank Nifty rose 100 points (0.19 percent) to 51,549. Market breadth was positive, with about 1,881 shares seeing buying interest compared to 1,098 declining shares on the NSE.

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Nifty Outlook and Strategy

According to Dhupesh Dhameja, Derivative Research Analyst at Samco Securities, the Nifty index witnessed a short-covering-led recovery after opening on a gap-down note and closed higher, indicating buying interest emerging near the lower support zone. However, a follow-through bullish candle is still required to confirm the sustainability of the rebound.

Key Indicators and Strategy

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The RSI also shows a positive divergence, indicating weakening bearish momentum, though confirmation is pending above immediate resistance levels. Despite the recovery, the index continues to trade below key short-term moving averages, suggesting the pullback is still within a broader corrective phase, and rallies may face selling pressure at higher levels.

Strategy: Traders may consider a Short Straddle for the April 7 expiry by selling one lot of 22,700 CE at Rs 269 and one lot of 22,700 PE at Rs 263. This setup is designed to capitalize on potential range-bound momentum.

Technical Analysis

Rajesh Bhosale, Technical Analyst at Angel One, states that the Nifty has formed a “Meeting Lines” pattern, while on the weekly chart, a small bullish-bodied candle with a long lower shadow is visible—both indicating a potential pause in the current downtrend. However, these formations require confirmation through follow-up buying in the coming sessions.

Strategy: Buy Nifty Futures on dips around 22,500, with a stop-loss of 22,200, targeting 23,000 / 23,150.

Bank Nifty - Outlook and Positioning

Rajesh Bhosale, Technical Analyst at Angel One, states that the Bank Nifty has formed a strong bullish candle after the recent decline, signaling initial signs of short covering. However, a follow-through bullish candle is still required to confirm the sustainability of the rebound.

Strategy: Buy Bank Nifty Futures on dips around 51,000, with a stop-loss of 50,000, targeting 52,500–52,800.

Market Outlook

The market is expected to remain cautious in the short term due to the ongoing West Asia war and increased market volatility. Traders are advised to remain cautious over the next one to two trading sessions and focus on buying dips around key support levels.