Cautious Optimism Returns: Nifty Tracks Recovery While Bank Nifty Finds Support

The markets witnessed a relief rally on Wednesday, with both Nifty and Bank Nifty staging recoveries after recent sessions of persistent weakness. While sentiment remains cautious, early signs of stabilization are emerging, particularly with supportive cues from PSU banks.

Nifty: Recovery Attempt Gains Traction

The Nifty 50 index closed the day at 24,715.05, up 135.45 points (0.55%), extending its recovery with a bullish daily candle. Importantly, the index managed to close above its 9-EMA and 20-SMA, keeping the short-term setup tilted towards a rebound.

• On the daily chart, Nifty’s close aligned closely with the middle Bollinger Band (24,690), suggesting the index is attempting to regain control after recent volatility.
  
  
• Key resistance levels:
  
  
  • 24,770 (50% Fibonacci retracement)
    
    
  • 24,880 (61.8% Fibonacci retracement)
    
    
• Support levels:
  
  
  • 24,580–24,500 zone remains a crucial cushion.
    
    

Momentum indicators add weight to the cautious optimism:

• The RSI improved to 48, inching closer to the neutral 50 mark.
  
  
• The MACD, though still in a negative crossover, is showing signs of narrowing on the histogram—hinting at easing downside momentum.
  
  

Outlook: A decisive close above 24,800 is required to confirm a sustainable recovery. Until then, Nifty is expected to oscillate within the broader 24,400–24,800 band, with intraday swings favoring a “cautious trading approach.”

Bank Nifty: Relief Rally but Bias Remains Weak

The Nifty Bank index ended at 54,067.55, up 406.55 points (0.76%), marking a strong relief rally after recent sharp declines.

• On the daily chart, the index formed a bullish candle, but continues to oscillate within a Darvas box formation, signaling consolidation.
  
  
• Despite today’s uptick, Bank Nifty remains below all key short-term moving averages, keeping the broader bias tilted to caution.
  
  

Supporting factors:

• PSU Banks provided stability, with the Nifty PSU Bank index gaining 1.03% to 6,920.75.
  
  
• A positive divergence is now visible on the daily RSI, which has recovered to 37 from oversold levels.
  
  

Outlook: Sustaining above the psychological 53,500–54,000 support zone is crucial to avoid deeper corrections. However, unless the index reclaims stronger resistance levels around 54,500–54,800, the upside is likely to face supply pressure.

Bottom Line

While Nifty has shown signs of regaining short-term momentum, Bank Nifty remains vulnerable despite a relief rally. Both indices continue to trade within well-defined ranges, making it essential for traders to remain cautious. For now, the strategy remains buy on dips near support with strict stop-losses, while awaiting a decisive breakout above 24,800 (Nifty) and 54,500 (Bank Nifty) to confirm a more sustainable uptrend.