Ravi Nathani suggests trading strategy for Nifty Bank, Financial Services

The Nifty Financial Services index is trading within a narrow range of 23,500-23,075, meanhwile, the Nifty Bank index is currently trading within a well-defined range of 50,650-49,800

Nifty Financial Services index: Buy on dips amid oversold conditions

The Nifty Financial Services index is trading within a narrow range of 23,500–23,075, with a decisive close above or below this range likely to trigger the next directional move. 

 

Despite recent short-term corrections, the index remains aligned with its long-term bullish trend. The current levels indicate oversold conditions, making it an attractive opportunity for traders to adopt a buy-on-dips strategy. Support levels are firmly positioned at 23,075, with a strict stop-loss at 23,000 on a closing basis to mitigate downside risks. 

 

This strategy aligns with the index reaching its support zone after a sharp correction, reinforcing the potential for a rebound. Upside resistance levels are expected at 23,500, followed by 23,800 and 24,200. These levels serve as key targets for traders aiming to capitalise on the anticipated recovery. 

 

The overall sentiment favors a cautious accumulation approach at lower levels, with a focus on maintaining disciplined risk management through clearly defined stop-loss levels. The technical outlook suggests a potential bounce from the support zone, backed by long-term bullish momentum. 

 

In conclusion, the Nifty Financial Services index offers a buying opportunity for traders as it hovers near its support levels. With a strict stop loss in place, the focus remains on accumulating positions for short-term targets of 23,500, 23,800, and 24,200. The index’s resilience and oversold status make it an attractive prospect for those looking to participate in the broader financial sector recovery.

 

Nifty Bank index: Range-bound action suggests patience for breakout

The Nifty Bank index is currently trading within a well-defined range of 50,650–49,800, reflecting a consolidation phase. A decisive close above or below these levels is expected to trigger the next directional move. A break above 50,650 could pave the way for higher resistance levels at 51,000, 51,425, and 52,450, indicating a potential bullish breakout. 

 

Conversely, if the index breaches 49,800, further support levels are anticipated at 49,550 and 48,950, suggesting additional downside pressure. The best approach for traders in the current scenario is to wait for a breakout before initiating fresh trades. However, risky traders may consider employing a buy-near-support and sell-near-resistance strategy, leveraging the range-bound levels to capitalise on smaller price movements. 

 

Technical indicators remain neutral, emphasising the need for a confirmed breakout to establish a clear trend. For now, cautious accumulation at lower levels with disciplined risk management remains the preferred strategy for risk-averse traders. 

 

In conclusion, the Nifty Bank index is in a consolidation phase, and traders should closely monitor the critical levels of 50,650 and 49,800 for directional cues. While aggressive traders may exploit the range for short-term gains, a definitive breakout is necessary to confirm the next major trend.  (Ravi Nathani is an independent technical analyst. Views expressed are personal.)