The Indian stock market benchmark indices, Sensex and Nifty 50, are likely to open higher Wednesday led by upbeat global market cues.
The trends on Gift Nifty also indicate a positive start for the Indian benchmark index. The Gift Nifty was trading around 24,235 level, a premium of nearly 75 points from the Nifty futures’ previous close.
On Tuesday, the domestic equity indices ended sharply lower with the Nifty 50 falling below 24,200 level.
The Sensex dropped 692.89 points, or 0.87%, to close at 78,956.03, while the Nifty 50 settled 208.00 points, or 0.85%, lower at 24,139.00.
Nifty 50 formed a long negative candle on the daily chart that has moved below the immediate support of the ascending trend line at 24,300 levels.
“Technically, this pattern indicates a possibility of downside breakout of the range movement. A sharp follow-through weakness could confirm the downside breakout. The recent swing high of 24,472 seems to be a lower top for the Nifty 50 as per daily timeframe chart,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He believes a slide below another lower support of 24,000 - 23,900 levels could trigger a reasonable downward correction in the market.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Nifty 50 slipped into weakness on August 13 and closed the day lower by 208 points.
“Bears have returned to the market as the index repeatedly failed to break above the 21 EMA (Exponential Moving Average). The near-term trend appears negative. On the upside, 24,250 now serves as a new resistance level, and as long as Nifty remains below 24,250, the strategy should be to sell on rallies,” said Rupak De, Senior Technical Analyst, LKP Securities.
According to him, on the downside, initial support is around 24,000 and if the index falls below this level, it may decline further towards 23,700.
VLA Ambala, Co-Founder of Stock Market Today noted that Nifty’s RSI currently stands at 45 on daily, 63 on weekly, and 73 on monthly timeframes, indicating that prices might cool down and create attractive buying opportunities for market participants.
“Meanwhile, the market is in an overbought zone and needs correction. Factors Those looking to invest now should hedge their positions, as the market may soon offer strong entry points. I advise investors to remain vigilant for buying opportunities as the market navigates through these challenges,” Ambala said.
According to her, Nifty can expect support levels between 24,000 and 23,830 and face resistance around 241,20 and 24,225 in today’s session.
Bank Nifty index plunged 746.10 points, or 1.48%, to close at 49,831.85 on Tuesday, forming a long bearish candlestick pattern on the daily charts.
“The Max Pain for Nifty is trading at 24,300 and for Bank Nifty at the 50,200 level, however based on the OI build up, today’s weekly expiry is likely for Nifty at 24,200 and for Bank Nifty around 50,000. Broader Indices may trade in a zig-zag manner and two way movements shall be witnessed with mild downward bias. However we advise to build a Long position at today’s low for next week expiry,” said Rahul Ghose, CEO of Hedged.in.
Meanwhile, Bank Nifty can find support around 49,450 and 49,000 and notice resistance near 50,060 and 50,200 levels, said Ambala.
Bank Nifty was unable to sustain the 50,000 levels as it closed at 49,830 levels on August 13.
Rahul Ghose, CEO of Hedged.in said that significant Bank Nifty call writing was seen above 49,800 levels indicating a strong resistance at 49,800 level. With the view on the downside, here is a low-risk Bank Nifty options strategy from hedged.in which makes money if the Bank Nifty moves down by the end of today’s expiry.
What’s best about this trading strategy is that, even if the Bank Nifty does move up or sideways, the strategy barely loses any money with risk in the trade being ₹700 only, Ghose said.
Here’s Bank Nifty Options Trading Strategy for today on expiry day:
Buy 1 lot of the 14th Aug expiry 49800 PE at CMP
Buy 1 lot of the 14th Aug expiry 49100 PE at CMP
Sell 1 lot of the 14th Aug expiry 49500 PE at CMP
Sell 1 lot of the 14th Aug expiry 49200 PE at CMP
The capital required in the trade is ₹38,000
This trade can be entered today if Bank Nifty is trading between the levels of 49,800 and 50,000.
The maximum loss in the trade is ₹700 and the target in the trade should be 2% to 3% on the capital depending upon the time and individual risk appetite.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
