Nifty Gains 3% as Technical Analysts Outline Key Resistance Zones and Trading Strategies

Indian equity benchmarks recorded a recovery last week, with the Nifty gaining 3% and establishing a higher-top and higher-bottom structure. Market analysts noted that while the overall sentiment has turned bullish following recent momentum, the index faces critical resistance levels that must be breached to sustain further upward momentum.

According to Chandan Taparia, Head of Derivatives & Technicals, Wealth Management at Motilal Oswal Financial Services, Nifty has reclaimed its 20-day moving average and sustained its position above the 23,000 level. Taparia highlighted the formation of a Morning Star pattern, accompanied by a rising Relative Strength Index (RSI) and strong support at 22,786. He projected the next upside target zone for Nifty to be between 23,400 and 23,500.

Nifty Technical Outlook and Strategy

For option traders targeting the October 27 monthly expiry, Taparia outlined a bull call spread strategy on the Nifty. The strategy involves purchasing one lot of the 23,200-strike call while simultaneously selling one lot of the 23,400-strike call. This setup entails a maximum risk of 70 points, or Rs 4,550 per lot, against a maximum potential profit of 130 points, or Rs 8,450 per lot.

Offering another technical perspective, Somil Mehta, Head of Retail Research at Mirae Asset Sharekhan, noted that Nifty has rebounded from a low of 22,180 and is currently testing its 40-day moving average. Mehta identified the primary support level between 22,800 and 22,550, with immediate resistance located in the 23,475 to 23,600 range. He recommended buying on dips towards 22,800, setting upside targets between 23,475 and 23,600.

Bank Nifty Resistance and Outlook

Regarding the banking sector, technical views remain mixed near critical moving averages. Hitesh Rathi, Technical Analyst for Equity & Derivatives at Angel One, reported that Bank Nifty is approaching the 56,000–56,100 band. This zone previously acted as technical support and is now expected to act as a significant resistance level. Rathi noted that this region coincides with the 50-day exponential moving average as well as the 20-week and 50-week exponential moving averages, creating a confluence of resistance.

Rathi recommended a strategy of selling on rallies toward the 56,100–56,200 range for Bank Nifty, maintaining a stop loss at 56,600 and aiming for downside targets between 55,500 and 55,400.

In contrast, Somil Mehta noted that while Bank Nifty is trading in a narrow range, its underlying momentum remains bullish. Mehta stated that a decisive move above 56,056 could push the index toward 56,550–56,925, with downside support lying between 55,400 and 55,500. Mehta suggested buying Bank Nifty at current market prices or on dips toward 55,400–55,500, with a stop loss at 55,000 on a closing basis and targets in the 56,500–56,925 range.

Analyst Stock Picks for the Week

Analysts across research firms also highlighted specific single-stock opportunities based on technical setups:

• Coforge: Recommended as a Buy by Chandan Taparia at a current market price (CMP) of Rs 1,951, targeting Rs 2,070 with a stop loss at Rs 1,890. Taparia noted a bullish pin bar formation trading near its 52-week high, with a potential breakout above Rs 2,000.
• Kotak Bank: Recommended as a Buy by Chandan Taparia at CMP Rs 447, with a target of Rs 475 and a stop loss at Rs 433, citing an uptrend near its all-time high and potential fresh gains on a breakout above Rs 460.
• Indian Hotels: Recommended as a Buy by Hitesh Rathi at CMP Rs 772, with targets at Rs 880–885 and a stop loss at Rs 704, following a breakout above a major falling trendline and consolidation range.
• Supreme Industries: Recommended as a Buy by Hitesh Rathi at CMP Rs 3,602, targeting Rs 3,870–3,880 with a stop loss at Rs 3,370, supported by a strong base in the Rs 3,200–3,290 band and a turtle breakout on Point and Figure charts.
• Nykaa: Recommended as a Buy by Somil Mehta at CMP Rs 344, targeting Rs 363–375 with a stop loss at Rs 331.50, after bouncing from the lower end of its trading range.
• Hindalco: Recommended as a Buy by Somil Mehta at CMP Rs 910, targeting Rs 955–975 with a stop loss at Rs 858, following the completion of a corrective a-b-c pattern from its May high.