Nifty Fin Services in corrective phase, PSU Banks rangebound; details here

Nifty Financial Services Index
 

The Nifty Financial Services Index currently shows a downward trend on the charts. Key support levels are anticipated at 23,080, 22,800, and 22,550. For traders and investors, the optimal strategy would be to wait for the ongoing correction to complete before accumulating the index and its constituents around these support levels. This approach ensures that positions are taken at more favorable risk-reward ratios, minimising potential losses and maximising gains once the index stabilises.

Resistance levels for this week are projected at 23,600 and 23,800. Considering the downward trend and the proximity to these resistance levels, it is advisable to avoid fresh buying until the index shows signs of bottoming out near the support zones. This cautious stance is particularly important given the current market volatility, which can lead to false breakouts and increased trading risks.

In summary, the Nifty Financial Services Index is in a corrective phase with significant support at 23,080, 22,800, and 22,550. Traders should wait for the correction to end before initiating new positions. Resistance levels to watch are 23,600 and 23,800, with a recommendation to accumulate at support levels for better risk management.

Nifty PSU Banks Index
 

The Nifty PSU Banks Index is currently range-bound, trading between 7,800 and 6,900. A close above or below these levels would act as a trigger for a directional move. Until a breakout occurs on either side, the best trading strategy is to buy near the support level of 6,900 and sell near the resistance level of 7,800. This range-bound trading approach allows traders to capitalise on price movements within the defined range, ensuring steady returns without the need for high-risk positions.

For safer trading, it is advisable to wait for a breakout and then trade accordingly. If the index breaks and closes above 7,800, it would signal a bullish trend, and traders can look for higher targets. Conversely, a close below 6,900 would indicate a bearish trend, prompting traders to consider short positions. Technical indicators are currently flat, suggesting a lack of strong momentum in either direction. This reinforces the need for a cautious approach, focusing on trading within the established range until a clear breakout occurs.

In conclusion, the Nifty PSU Banks Index is trading within a defined range of 7,800 to 6,900. Traders should adopt a range-bound strategy, buying near support and selling near resistance. Safe traders should wait for a breakout before taking any new positions. Keeping an eye on the technical indicators and the support and resistance levels will be crucial for effective trading in the coming week.

(Disclaimer: Ravi Nathani is an independent technical analyst. Views are his own. He does not hold any positions in the Indices mentioned above and this is not an offer or solicitation for the purchase or sale of any security. It should not be construed as a recommendation to purchase or sell such securities.)