Trading Strategy: Despite the rise, how did Nifty lose strength, fell by 300 points, know the earning strategy?

Trading Strategy: After two days of rise, a huge decline is being seen in the market today. At around 10:00 am, the Sensex was trading 990.07 points (or 1.32%) lower at 74,283.38, while the Nifty was trading 300.25 points (or 1.29%) lower at 23,006.20. About 901 shares are rising, while 2,678 shares are declining, and there is no change in 151 shares. Given this situation, let’s look at possible trading strategies for the market today.

strategy for nifty

Discussing the future movement of the market, CNBC-Awaaz’s Virendra Kumar said that the first resistance level for Nifty lies between 23,461 and 23,533, while the main resistance lies between 23,609 and 23,661/23,716. Conversely, the first base support is at 23,166–23,232, and the main base support is at 22,967–23,049.

On Wednesday, the index moved towards 23,450 from the range of 23,121–23,338. At that time, clear advice was given to book profits. By the time the market closed, it softened a bit. Nifty has once again closed below its 10-day exponential moving average (10DEMA). Geopolitical conditions remain challenging. A huge jump has been seen in the prices of crude oil. Where American markets performed well on Wednesday. Whereas yesterday they closed with a decline.

FII selling in the cash segment has reduced. Buying was seen in index futures. Short positions were also covered, reducing the net short position to 238,000 contracts. Looking at Wednesday’s price swings and significant call option open interest (OI) positions, immediate resistance levels are located at 23,461/23,533.

The next resistance will be in the range of 23,716–23,800. However, this level will work only when crude oil prices fall. Considering the current difficult market situation, crude oil prices are expected to fall. If this happens then it will be very important to keep an eye on the “Base-1” support level. As long as Base-1 remains in place, the possibility of a “controlled decline” remains. Below this level, Base-2 can be seen.

Strategy for Bank Nifty

For Bank Nifty, the first level of resistance lies in the 53907–54110 zone, while the major resistance lies between 54326 and 54517/54716. On the other hand, the main support base (Base-1) is at 53388–53517, and the major support base (Base-2) is at 52832–53112. After successfully breaking the Resistance-1 zone on Wednesday, Bank Nifty regained its 10-Day Exponential Moving Average (10DEMA).

Right now, the 54000 mark (which coincides with 10DEMA) is the zone where Call writers are the most. The rise in crude oil prices is not harmful for banks. In fact, it is especially beneficial for Public Sector Undertaking (PSU) banks. In this particular range, more put writing is being seen at the level of 53000, while there are less put writers at the level of 53500.

Given this situation, expectations of a “controlled decline” or a breakout above Resistance-1 will be justified only as long as the price remains above Base-1. If Base-1 (53517–53388) is broken, Bank Nifty is likely to move towards Base-2. Traders should make their strategies accordingly. Based on current data, the 52832 level looks like the next important target; More levels below will emerge only after touching the mark of 52832.