Trading Plan: Will Nifty Continue to Outperform Bank Nifty after NDA Forms Government for Third Time?

Trading Plan: Will Nifty Continue to Outperform Bank Nifty after NDA Forms Government for Third Time?

Keywords: Nifty, Bank Nifty, NDA, Technical Analysis, Trading Strategy

The National Democratic Alliance’s (NDA) resounding victory in the 2019 Lok Sabha elections has raised questions about the future performance of the Indian stock market. Technical analysis suggests that the Nifty 50 index may continue to outperform the Bank Nifty index in the near future.

Technical Analysis

Relative Strength Index (RSI): The RSI for both Nifty and Bank Nifty is currently above 50, indicating that both indices are trending upwards. However, Nifty’s RSI is significantly higher than Bank Nifty’s, suggesting that Nifty is relatively stronger.
Moving Averages: The Nifty has broken above its 200-day moving average (DMA), while the Bank Nifty is still trading below its 200-DMA. This indicates a bullish trend for Nifty and a neutral to bearish trend for Bank Nifty.
Chart Patterns: Nifty has formed an ascending triangle pattern, which is a bullish pattern that indicates a potential upside breakout. Bank Nifty, on the other hand, has formed a descending wedge pattern, which is a bearish pattern that indicates a potential downside breakout.

Trading Strategy

Based on the technical analysis, traders may consider the following trading strategy:

Buy Nifty: If Nifty breaks above the resistance level of 12,300, traders can enter long positions with a target of 12,600.
Sell Bank Nifty: If Bank Nifty falls below the support level of 28,500, traders can enter short positions with a target of 28,000.

Risk Management

It is important to note that trading involves risk. Traders should always use appropriate stop-loss orders to limit their potential losses. In this case, traders could set a stop-loss order for Nifty at 12,200 and for Bank Nifty at 28,600.

Conclusion

While the technical analysis suggests that Nifty may continue to outperform Bank Nifty in the near future, it is important to remember that market conditions can change rapidly. Traders should monitor the market closely and adjust their trading strategies accordingly.