Trading Plan: Will Nifty 50, Bank Nifty Break Previous Week's Low?
Nifty 50 and Bank Nifty face critical technical support levels after significant weekly declines. Nifty 50 closed at 25,049 with a loss of 241 points (0.95%), while Bank Nifty fell 727 points (1.23%) to 58,473. Technical analysts warn that a break below 24,900 for Nifty and 58,280 for Bank Nifty could trigger further correction toward 24,600-24,500 and 58,100-58,000 levels respectively. Market breadth remains weak with 2,233 declining shares against 702 advancing on NSE, indicating broad-based selling pressure.
*this image is generated using AI for illustrative purposes only.
Indian equity markets are at a crucial juncture as both Nifty 50 and Bank Nifty test key technical support levels amid broad-based selling pressure. Market participants are closely watching whether the indices will break below previous week's lows, which could trigger further correction in the coming sessions.
Market Performance and Breadth
On January 23, the equity markets witnessed significant selling pressure across segments. The benchmark indices closed with notable losses, reflecting the prevailing bearish sentiment.
| Index | Closing Level | Daily Change | Percentage Change |
|---|---|---|---|
| Nifty 50 | 25,049 | -241 points | -0.95% |
| Bank Nifty | 58,473 | -727 points | -1.23% |
Market breadth remained decidedly weak, with approximately 2,233 shares witnessing selling pressure against 702 advancing shares on the NSE, indicating broad-based weakness across the market.
Nifty 50 Technical Analysis and Outlook
Technical analysts highlight several concerning developments for the Nifty 50. During the week, the index not only breached the key 89-day exponential moving average (DEMA) but also slipped below the long-term support of the 200-day moving average (DMA). After failing to sustain above the 26,300 zone earlier this month, prices have broken below the November swing low, confirming a "Rounding Top" formation—an unfavorable development for bulls.
Over the past 15 days, the Nifty has corrected by more than 1,300 points, while the broader markets have experienced even more severe damage with sharp sell-offs across individual stocks. The smoothened RSI has entered oversold territory, slipping well below the 20 mark.
Key Levels and Trading Strategy
| Support/Resistance | Levels |
|---|---|
| Immediate Support | 24,900, 24,800 |
| Next Support Zone | 24,600-24,500 |
| Immediate Resistance | 25,350-25,450 |
| Key Resistance | 25,250, 25,600 |
Experts suggest that if Nifty 50 decisively breaks below 24,900 (the previous week's low), a correction toward the 24,600-24,500 zone cannot be ruled out. In case of a bounce, the 25,350-25,450 zone may act as a hurdle.
Bank Nifty Analysis and Positioning
Bank Nifty has shown even more pronounced weakness, with the index settling with a weekly loss of 1,622 points. On the weekly chart, it formed a long bearish candle with lower highs and lower lows compared to the previous week, clearly indicating increasing weakness at current levels.
Prices have convincingly broken below the crucial support zone of 58,800-58,750, indicating that control has shifted toward sellers. The repeated inability of buyers to reclaim the 20-EMA near 59,400 highlights the presence of strong overhead resistance.
Bank Nifty Key Levels
| Parameter | Levels |
|---|---|
| Critical Support | 58,280 (previous week's low) |
| Immediate Support | 58,100-58,000 |
| Next Support | 57,600, 57,500 |
| Upside Target | 59,000-59,400 |
| Key Resistance | 58,800, 59,000 |
Analysts emphasize that Bank Nifty needs to hold above 58,280 for an upward march toward the 59,000-59,400 zone. A breach below this level could bring immediate support into play at 58,100-58,000, followed by the next key support at 57,600.
Expert Trading Strategies
Technical analysts have provided specific trading strategies for both indices:
Nifty 50 Strategies:
- Sell Nifty Futures on bounce around 25,200, with stop-loss of 25,400, targeting 24,600
- Alternative approach: Sell around 25,170 with stop-loss of 25,300, targeting 24,900-24,800
Bank Nifty Strategies:
- Sell Bank Nifty Futures on bounce around 59,000, with stop-loss of 59,500, targeting 57,500
- Alternative: Sell around 58,650 with stop-loss of 58,800, targeting 58,200-58,050
Market Outlook and Risk Factors
As markets head into Budget week, volatility is expected to remain elevated with the possibility of sharp swings on either side. The technical setup points to significant headwinds for buyers, with momentum indicators trending lower and supporting downside continuation in the near term.
However, analysts note that FII index shorts are at record highs, increasing the risk of sharp bear traps. Any swift reclaim above breakdown levels could trigger aggressive short covering, requiring positional bears to remain cautious. Traders are advised to remain highly selective and clearly define exit strategies given the current environment.
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