Ravi Nathani recommends buy on dips strategy for Nifty, Nifty Bank indices

Nifty Bank index is currently trading near its key support zone of 50,650-50,600. A close below this range would open the door for further downside, with immediate support levels at 50,250 & 49,650

Nifty Index: Buy on Dips Amid Oversold Conditions

 

The Nifty Index is currently positioned at a critical juncture, with this week’s key range being 23,600–23,525. A close below this range could lead to further downside, with immediate support at 23,450, followed by the next support at 23,280. However, the index has been trading in the oversold zone as indicated by technical indicators like RSI, MACD, and Stochastic since last week, suggesting potential for a rebound in the near term. 

 

The best trading strategy under current market conditions is to adopt a buy-on-dips approach. 

 

Oversold indicators and the likelihood of a post-monthly-close bounce add credence to this strategy. A monthly close below current levels might see the index underperform briefly, but a technical bounce is expected soon after. A confirmation of bullish momentum will only occur if the index manages to close above 23,900, which would indicate a reversal from the current range. Post-breakout, the next resistance levels are expected at 24,200, 24,350, and 24,575. For traders and investors, accumulating the index near support levels would provide an advantageous entry point, while monitoring for a breakout above 23,900 to confirm the upward trend. In summary, the index's oversold condition suggests an impending recovery, making buy-on-dips the optimal trading strategy for the near term.

 

Nifty Bank Index: Buy on Dips Amid Strong Support Levels 

The Nifty Bank Index is currently trading near its key support zone of 50,650–50,600. A close below this range would open the door for further downside, with immediate support levels at 50,250 and 49,650. 

 

However, the index is oversold on daily charts, suggesting a potential technical bounce is likely after the monthly close. The best trading strategy in the near term is to accumulate the index and its constituents near these support levels. Buying on dips at these levels provides an opportunity to capitalize on the expected recovery. 

 

As we move into early January 2025, the index is likely to aim for targets at 51,800, 52,250, and 52,650, driven by this anticipated bounce. Investors and traders are advised to monitor the 50,600 level closely, as it serves as a critical threshold for the index’s recovery. 

 

The oversold condition on daily charts, combined with the index’s historical tendency to rebound from such zones, makes buy-on-dips the optimal strategy for the near term. In summary, the Nifty Bank Index offers a favorable risk-reward opportunity around its current support levels, with an upside potential into January 2025.

 

(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.)