Indian stock market benchmark indices, Sensex and Nifty 50, are expected to open on a muted note on Wednesday tracking mixed sentiment in global markets.
The trends on Gift Nifty also indicate a flat start for the Indian benchmark index. The Gift Nifty was trading around 25,003 level, a premium of nearly 2 points from the Nifty futures’ previous close.
On Tuesday, the domestic equity indices ended choppy session flat amid mixed global cues.
The Sensex rose 13.65 points, or 0.02%, to close at 81,711.76, while the Nifty 50 settled 7.15 points, or 0.03%, higher at 25,017.75.
Nifty 50 formed a small negative candle on the daily chart which is indicating a formation of doji type candle pattern-not a classical one.
“The market has been showing consolidation movement near the all-time highs in the last couple of sessions. Hence, this action could be considered as a temporary pause before a decisive upside breakout of previous all-time highs at 25,078 levels,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He believes the short-term trend of Nifty remains positive and the market could consolidate further in the next 1-2 sessions before witnessing a sharp upside breakout into new all-time highs. A decisive move above 25,100 could open the upside target of 25,360, which is 38.2% Fibonacci extension, he added.
Here’s what to expect from Nifty 50 and Bank Nifty today:
In the Open Interest (OI) data, the highest OI on the call side was observed at the 25,300 and 25,500 strike prices, while on the put side, the highest OI was at the 24,800 strike price, noted Mandar Bhojane, Research Analyst at Choice Broking.
According to Rahul Ghose, CEO of Hedged.in, heavy build-up of the put OI & call OI at 25,000 levels, for August monthly expiry indicates Nifty 50 shall trade within narrow range for this week, and the index may attempt to test all-time high (ATH) levels.
Nifty shifted into a consolidation on August 27 and closed the day with minor gain, holding above the 25,000 level.
"The sentiment has entered an indecisive phase as the Nifty closed with a Doji pattern on the daily chart. The significant presence of both call and put option writers at the 25,000 strike price strengthens the technical setup. As a result, the Nifty is likely to remain range-bound or might experience a slight dip in the near term,” said Rupak De, Senior Technical Analyst, LKP Securities.
On the lower end, he believes 24,800 could act as immediate support, while a rise above 25,100 might push the Nifty towards 25,300.
VLA Ambala, Co-Founder of Stock Market Today noted that the Nifty 50 index closed beyond the 25,000 mark after trading within a small 100-point range, forming a Spinning Top candlestick pattern near its all-time high.
“For today’s session, if the price opens between 25,200 and 25,150, the ‘sell-on-the-rise’ strategy could be appropriate. Meanwhile, a gap-down opening could present a buying opportunity in the 24,850-24,900 range, especially during the morning session. Based on these aspects, the benchmark index Nifty can expect support levels between 24,930 and 24,850, while resistance could be noticed around 25,120 and 25,200,” Ambala said.
Aditya Agarwal, Head of Derivatives and Technical at Sanctum Wealth expects Nifty to consolidate between 24,950 - 25,100 for some time before giving any fresh breakout.
“Market remains ‘buy on dips’ and a move towards 24,950 - 24,920 can be used as a buying opportunity for targets of 25,070 - 25,100,” Agarwal said.
Bank Nifty index gained 130.65 points, or 0.26%, to close at 51,278.75 on Tuesday, forming a small bullish candlestick pattern on the daily chart.
“Bank Nifty now moving past the 51,000 zone has improved the bias and with a gradual rise is slowly and steadily strengthening the trend expecting further upward move with targets of 52,500 and 53,400 levels anticipated with significant 50-EMA (Exponential Moving Average) zone of 50,800 level maintained as the immediate near-term support,” said Vaishali Parekh, Vice President - Technical Research, PL Capital Group - Prabhudas Lilladher.
According to her, Bank Nifty would have the daily range of 50,900 - 51,800 levels.
From a short term perspective, Agarwal expects Bank Nifty to outperform broader markets, and a close above 51,300 can trigger a sharp short covering move that can drive index towards 51,800 - 52,240 levels.
Meanwhile, increased writing of the Bank Nifty call OI at 51,500 levels indicates the index is likely to close around 51,500 for August monthly expiry today, else may react from the resistance levels, Ghose said.
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.
