Gift Nifty 50 faces bull trap risk at 23,036 VWAP: Live levels

Last week, the Nifty surged by 3%, sparking optimism for a recovery, though experts caution it must clear crucial resistance levels for sustained gains. Chandan Taparia, head of derivatives and technicals at Motilal Oswal Financial Services, noted that the Nifty has created a higher-top, higher-bottom structure, reestablished its 20-day average, and remained above 23,000.

Technical indicators, including a Morning Star pattern, increasing RSI, and support at 22,786, support a bullish outlook, with the next upside zone identified between 23,400 and 23,500.

Investors can consider a bull call spread strategy for the October 27 monthly expiry, involving buying one lot of the 23,200-strike call and selling one lot of the 23,400-strike call. This strategy carries a maximum risk of 70 points (Rs 4,550 per lot) and a potential profit of 130 points (Rs 8,450 per lot).

Several stocks were highlighted as favorable buys, including Coforge, Kotak Bank, Indian Hotels, and Supreme Industries, with varying price targets and stop losses. Bank Nifty also approached a key resistance level at 56,000-56,100, coinciding with significant moving averages and acting as a potential hurdle for further gains.