Can RBI Policy trigger a breakout? Near support for Bank Nifty at 50,000

The Bank Nifty is expected to consolidate in the 50,000-50,600 range; a breakout in either direction will further set the next move for the index, says Hrishikesh Yedve of Asit C. Mehta.

The NSE Nifty is seen consolidating post the recent upside breakout. The RBI Policy outcome on Friday can act as a possible trigger for a directional move on the index on Friday.  The market attention now focuses on RBI's monetary policy committee decision, where expectations are of a 25-basis point repo rate cut along with additional non-rate measures to address domestic liquidity and rupee volatility, said Devarsh Vakil - Head of Prime Research, HDFC Securities in a note.  Technical Outlook  Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities recommends that the bullish chart pattern like higher tops and bottoms is intact as per daily timeframe chart on the Nifty, and the present weakness could be in line with the new higher bottom of the pattern. The higher bottom reversal needs to be confirmed at the lows.  The analyst expects the Nifty to find support around 23,500 - 23,450 levels. Adding that a decisive move above the hurdle of 23800 could open another round of upside bounce in the market.  Echoing similar a view, Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates said the major support for the Nifty lies at 23,430, while resistance remains at 23,810. He advises traders to adopt a cautious approach, buying near support and selling near resistance.    In case of the Bank Nifty, immediate support for the index is placed near 50,000 levels. Thus, the Bank Nifty is expected to consolidate in the 50,000 - 50,600 range in the short term. A breakout in either direction will further set the next move for the index, said Hrishikesh Yedve.  Nifty, Bank Nifty futures on Thursday  The Nifty February futures ended 0.4 per cent lower yesterday, while the open interest (OI) rose by 1 per cent and the premium increased to 86 points from 77 points the day before.  Meanwhile, the Bank Nifty February futures edged 0.1 per cent higher to 50,608 alongside a 38-point increase in the premium, and 3.3 per cent decline in the OI.  Data from NSE derivatives segment shows that foreign institutional investors (FIIs) were net sellers of 6,787 contracts in index futures worth Rs 1,221.53 crore. FIIs mostly sold Nifty futures (7,488 contracts), while net bought some Bank Nifty futures.    At the end of the day, FIIs long-short ratio in index futures dipped to 0.2 - implying 5 short positions in index futures for every long bet. Retail investors’ long-short ratio rose to 2.59; proprietary and domestic institutional investors (DIIs) long-short ratio also indicated bullish positions, with the long-short ratio at 1.33 and 1.15, respectively.  Stocks in F&O  On Thursday, Phoenix futures saw significant short build-up, as the stock dipped nearly 5 per cent on the back of 41 per cent surge on OI. Trent, Solar Industries and Page Industries declined in the range of 5 - 8 per cent, with the OI correspondingly increased by 23.1 per cent, 21.7 per cent and 18.3 per cent.  On the other hand, Metropolis Healthcare and SonaComs witnessed some short-covering. Both the stock rallied around 3.5 per cent each, while the OI decreased by more than 10 per cent at the respective counters. Motilal Oswal Financial Services also saw some trimming of short positions.