Trading Plan: Will Nifty, Bank Nifty Continue to Hit Fresh Record Highs on Election Results Day?

by | Jun 4, 2024 | 0 comments

Election results day often brings a wave of volatility and excitement to the stock markets. With the recent Lok Sabha election exit polls signaling a strong majority for the NDA government, analysts have projected that both Nifty and Bank Nifty may continue their upward trajectories. This blog delves into the trading strategies and outlook for Nifty and Bank Nifty, providing insights from leading market analysts.

Nifty Uptrend

The market ended the session of June 3 with robust gains, following exit polls that indicated a strong majority for the NDA government in the Lok Sabha election. Analysts expect the Nifty to march towards the 23,500 level with support at 22,000. Bank Nifty needs to stay above 50,000 to sustain upward momentum towards the 52,000 mark.

On June 3, the Nifty 50 closed 733 points or 3.25 percent higher at 23,263.90, and Nifty Bank surged 1,996 points or 4.07 percent to 50,980. About 1,496 shares advanced, and 825 shares declined on the NSE, reflecting a positive market sentiment.

Nifty Outlook and Strategy

Jay Thakkar, Vice President & Head of Derivatives and Quant Research

Jay Thakkar highlights that Nifty has provided a breakout on the upside from the rising channel. The momentum indicator MACD (Moving Average Convergence Divergence) is well into the buy mode, which is a positive sign for the bulls. The India VIX, a measure of market volatility, has also fallen sharply, indicating that the breakout is likely to sustain.

  • Key Resistance: 23,500, 23,800
  • Key Support: 23,000, 22,800
  • Strategy: If Nifty opens flat, then buy and add more near 23,200 and below 22,100, targeting 23,500. If Nifty opens gap up, buy on dips; if it opens gap down, buy as well.
  • Stop-Loss: 23,100

Mehul Kothari, DVP – Technical Research at Anand Rathi

Mehul Kothari notes that Nifty 50 closed near the upper end of the rising channel. A gap-up move in the upcoming session would confirm a breakout, potentially leading to a fresh rally. The FIIs’ (Foreign Institutional Investors) long-short ratio in index futures indicates they are heavily short. Optimism could force them to cover their shorts, further fueling the upside.

  • Key Resistance: 23,300, 23,500, 23,800
  • Key Support: 23,100, 23,000
  • Strategy: Buy on dip near 23,200
  • Stop-Loss: 23,000

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

Pravesh Gour believes the overall trend is bullish. Dips around 23,080-23,100 could be a good opportunity to buy. A breakout above 23,383 could signal a move towards 23,500. If it slips below 23,080, it could move towards 23,000 levels, with crucial support at 22,800.

  • Key Resistance: 23,383, 23,500, 24,000
  • Support: 23,100, 23,000, 22,800
  • Strategy: Consider buying near 23,100
  • Stop-Loss: Place a stop-loss order below 22,800

Bank Nifty – Outlook and Positioning

Jay Thakkar, Vice President & Head of Derivatives and Quant Research

Jay Thakkar indicates that Bank Nifty has provided a breakout above the 50,200-50,400 range. As long as this range is held on a closing basis, the next target on the upside is 52,000 to 52,500 levels.

  • Key Resistance: 51,500, 51,700, 52,000
  • Key Support: 50,500, 50,300
  • Strategy: If Bank Nifty opens flat, then buy and add more near 50,650 and below 50,400, targeting 51,500. If it opens gap up, buy on dips; if it opens gap down, buy as well.
  • Stop-Loss: 50,400

Mehul Kothari, DVP – Technical Research at Anand Rathi

Mehul Kothari expects further upside in Bank Nifty towards 52,000 – 52,500 in the coming session. On the downside, positional support is now placed at 50,000.

  • Key Resistance: 51,200, 52,000
  • Key Support: 50,500, 50,100
  • Strategy: Buy on dips near 50,700
  • Stop-Loss: 50,500

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

Pravesh Gour suggests that dips towards 50,500 would be an opportunity to buy Bank Nifty with strong support. Below 50,500, strong support is at the 50,000 level. On the upside, 51,500 would be the resistance zone.

  • Key Resistance: 51,200, 51,500, 52,000
  • Key Support: 50,900, 50,500, 50,000
  • Strategy: Consider buying near 50,500 for potential upside
  • Stop-Loss: Place a stop-loss order below 50,000

Read Also: Adani Group Shares Continue to Rally

Conclusion

Election results day is a crucial period for traders as it often brings significant volatility and opportunities. Analysts remain optimistic about the Nifty and Bank Nifty’s upward momentum, driven by positive market sentiment following the exit polls. Investors should carefully monitor key resistance and support levels and adhere to the recommended trading strategies to capitalize on the potential market movements. As always, it’s essential to maintain a disciplined approach with appropriate stop-loss orders to mitigate risks.

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