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Synopsis : Nifty Bank is projected to experience a 'sell on rise' trend, with key resistance levels around 52,000. Traders are advised to adopt a cautious approach, especially when the index nears this resistance. Executive Director of Choice Broking, Sumeet Bagadia, recommends monitoring stocks such as State Bank of India (SBI) and Bank of Baroda (BOB), which are expected to perform well if the index shows upward movement. The technical indicators suggest potential bearish signals for the index, highlighting resistance zones and support levels that traders should consider in their strategies.
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Sumeet Bagadia, Executive Director at Choice Broking, has advised traders to adopt a "sell on rise" strategy for Nifty Bank this week. The index is showing bearish signals, particularly on the weekly chart, where recent trading patterns suggest resistance around the 52,000 mark. As a result, Bagadia suggests that traders should maintain a cautious outlook and consider selling during any upward movements unless the index breaks and sustains above this resistance.
During the previous week, Nifty Bank fell to a low of 50,194.30 but managed a recovery to close above 51,000, indicating a possible consolidation phase. Technical indicators, including candlestick patterns and the Moving Average Convergence Divergence (MACD), point toward further selling pressure if the index attempts to rise. Specifically, the formation of a small body with a long lower wick on the weekly chart indicates a brief pullback from lower levels, which could meet resistance as it progresses upward.
Bagadia highlights that traders should watch for key levels: support is anticipated around 50,500 and 49,700, while resistance could emerge near the 52,000-52,500 range. He further adds that the index's proximity to its 20-day Exponential Moving Average (EMA) could determine future movements. A breach below this short-term EMA could lead to further declines, potentially testing the 50-day EMA levels. Additionally, the Relative Strength Index (RSI) has shown signs of weakening, currently positioned at 52.94, suggesting declining market strength.
Moreover, open interest data indicates that put options are concentrated around the 50,500 level, implying it as a significant support zone, while call options at 51,500 and 52,000 reflect possible resistance. This data suggests a trading range of 50,500 to 52,000 for the ongoing weekly expiry, advising traders to maintain strict stop-loss levels and be prepared for potential market volatility.
On the stock-specific front, Bagadia recommends looking at public sector banks like SBI and BOB. These stocks are positioned well to benefit if Nifty Bank manages to see upward movements during the week, as their performance could outshine others under favorable conditions.
Disclaimer: The information provided here is for general informational purposes only. It should not be construed as investment advice. Please conduct your own research or consult with a certified financial advisor before making any trading decisions.
