US–Iran Peace Deal Hopes: Potential Catalyst for Nifty 50, Bank Nifty Rebound Amid Consolidation

Market Outlook: Nifty 50 and Bank Nifty Face Resistance and Support Levels

The Indian stock market, as represented by the Nifty 50, may attempt to rebound amid ongoing consolidation and rising hopes of a US–Iran peace deal. However, the sustainability of this rebound is key to watch. In case of a bounce back, the index may face resistance at the 50-day EMA (24,180), followed by 24,350. On the lower side, the 20-day EMA (near 24,000) can act as immediate support, as a decisive fall below it can take the index down to 23,800.

The Nifty 50 slipped 86.5 points (0.36 percent) to 24,033 on May 5, while the Bank Nifty fell 331 points (0.60 percent) to 54,547, with market breadth favouring bears. About 1,621 shares declined, compared to 1,360 advancing shares on the National Stock Exchange.

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Technical Analysis

Aditya Thukral, Founder & Analyst of AT Research & Risk Managers, notes that the Nifty 50 has largely been sideways between 24,350 and 23,800 for the past few days and is forming a lower high and higher low price structure on short-term charts. The index has been closing above the 20-day EMA and below the 50-day EMA for the past six trading sessions, depicting sideways price action based on another technical parameter.

Ashish Kyal, Founder and CEO of Waves Strategy Advisors, observes that the Nifty is currently stuck in a sideways triangle pattern, showing clear indecision. Rising crude oil prices due to US–Iran tensions are adding some pressure on the index, while implied volatility (IV) is falling and the range is getting tighter, which usually means a big move may come soon.

Preeti K Chabra, Founder of Trade Delta, notes that the Nifty formed a bearish hammer pattern and continues to trade within a downward-sloping channel, reflecting a weak short-term structure. The index closed below the 40-day EMA (24,080), which now acts as immediate resistance, signalling bearish momentum.

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Bank Nifty Outlook and Positioning

Aditya Thukral notes that the banking index seems to have completed an impulsive leg of decline after stabilising around the previous swing low of 54,440. The signs are visible on shorter time frame charts, where the index is seen breaking lower highs of a smaller degree, and resistances are placed quite higher from current levels.

Ashish Kyal observes that Bank Nifty has continued to drift lower in the form of lower highs and lower lows, indicating a persistent sell-off. Prices have been consistently respecting the previous day’s high on a closing basis for nearly nine consecutive trading sessions, which reflects sustained pressure in the market.

Preeti K Chabra notes that Bank Nifty formed a bearish candle and continues to trade within a downward-sloping channel, indicating sustained weakness in the near-term trend. The index is facing rejection near the 54,900 zone and is currently trading below the 20-day SMA (55,557) and the 40-hour EMA (55,200), which are acting as a resistance zone.

Trading Strategies

Aditya Thukral recommends buying Nifty Futures only above 24,150 with a stop-loss of 24,050, targeting 24,300 and 24,350.

Ashish Kyal suggests creating long positions in Nifty Futures above 24,090 with targets of 24,190, followed by 24,290, and a stop-loss at 23,990.

Preeti K Chabra recommends selling Nifty Futures near 24,080 for a target of 23,882, followed by 23,771, with a stop-loss of 24,181.

Aditya Thukral suggests buying Bank Nifty Futures on dips around 54,600 with a stop-loss of 54,300, targeting 55,200.

Ashish Kyal recommends creating long positions in Bank Nifty Futures if the index breaks above 54,650, with a stop-loss at 54,410 and targets of 54,890, followed by 55,050.

Preeti K Chabra suggests selling Bank Nifty Futures near the cash reference level of 54,900 for a target of 54,466, followed by 54,221, while maintaining a strict stop-loss of 55,200.