Trade Setup for September 17: Nifty breaks out with July highs in sight; Watch for Nifty Bank

The Bulls regained control after a brief pause in the previous sessions. As anticipated, the Nifty extended its momentum and crossed the 25,200 mark.

The range-bound action of the last few days culminated in a sharp upside breakout on Tuesday, with the Nifty closing 169 points higher at 25,239. After a firm start, the market maintained its upward momentum for most of the session, strengthening further towards the close. The index ended the day at the highs.

Both the Nifty and Nifty Bank broke past key resistance levels. The Nifty surpassed its August 21 swing high of 25,154, while the Nifty Bank closed above the 55,000 mark for the first time since August 25.

Intraday dips, especially in the banking index, were quickly bought into, with index heavyweights such as Kotak Bank, Axis Bank, HDFC Bank, Reliance Industries, and TCS driving gains.

Broader markets extended their winning streak to eight sessions. The Nifty Midcap 100 gained 0.54%, while the Nifty Smallcap 100 rose 0.95%.

On the macro front, attention is turning to the India-US trade talks, with chief negotiators scheduled to meet for the first in-person discussion since higher US tariffs on Indian goods took effect on August 27.

Globally, investors await key US retail sales data later today, followed by the Federal Reserve’s policy decision tomorrow, where markets are pricing in the first rate cut since 2024. EU and UK inflation data, also due tomorrow, may add further cues.

Looking ahead, analysts expect the uptrend to continue. Siddhartha Khemka of Motilal Oswal said markets are likely to sustain their gradual upmove while tracking trade negotiations and the Fed’s rate cut decision, which could significantly shape near-term sentiment.

Both foreign and domestic institutional investors remained net buyers in the cash market on Tuesday, further boosting momentum.



Key levels to watch

- Nifty has closed just below the July resistance band of 25,250.

- Above 25,300, the next key hurdle is the July 9 high of 25,548.

- Nifty Bank has gained every day in September except one.

- Upside resistances lie at 55,300 and 55,700, the August 22 and 25 highs.

Expert views

Nagaraj Shetti of HDFC Securities said the short-term trend remains positive, with Nifty likely to advance towards 25,400-25,500. Immediate support is seen at 25,100.

Nilesh Jain of Centrum Broking said that the overall structure favours a "buy on dips" strategy, with the index expected to move towards 25,500. Support has shifted higher to 25,050.

Rupak De of LKP Securities said that Nifty has given a double-bottom breakout on the daily chart, sustaining above the 21-EMA. With RSI breaking past its swing high, momentum signals remain strong. He sees potential upside towards 25,500 and beyond, while support remains firm at 25,000.