Indian stock market indices, Sensex and Nifty 50, are likely to open with gains on Wednesday following mixed cues from global peers.
The trends on Gift Nifty indicate a gap-up start for the Indian benchmark index. The Gift Nifty was trading around 24,250 level, a premium of nearly 160 points from the Nifty futures’ previous close.
On Tuesday, the domestic equity benchmark indices ended lower, extending their losses into the third consecutive session, with the Nifty falling below 24,000 level.
The Sensex fell 166.33 points to close at 78,593.07, while the Nifty 50 settled 63.05 points, or 0.26%, lower at 23,992.55.
Nifty 50 formed a long bear candle on the daily chart with a long upper shadow.
“We observe a formation of back-to-back two negative candles in the last two sessions. Technically, this pattern indicates a formation of ‘bearish side by side black line’ and this market action signals a down trend continuation pattern for the coming sessions,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He believes the short-term trend of Nifty 50 remains weak and a decisive move below 24,000 - 23,900 could pull Nifty down to another support of 23,625.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Analysing the Nifty Open Interest (OI) data, Mandar Bhojane, Research Analyst at Choice Broking said that the highest OI on the call side was at the 24,300 and 24,500 strike prices, while on the put side, it was concentrated at the 23,500 strike price.
Nifty 50 index made a failed attempt to show a pullback rally on August 6 and closed the day lower by 63 points below the 24,000 level.
“Nifty formed an inverted hammer pattern on the half-hourly chart, suggesting a possible bullish reversal of a smaller degree. Also, the index seems to have found support above the previous day’s low. Now, two things might happen: one, the Nifty might recover towards 24,400 - 24,440 (21-EMA), where selling pressure is likely to occur once again; or, it might fall straight away to 23,965 (50-EMA) - 23,650,” said Rupak De, Senior Technical Analyst, LKP Securities.
VLA Ambala, Co-Founder of Stock Market Today believes if Nifty fails to gain support at its 50-day EMA (Exponential Moving Average), the index may test the 23,500 range within 2-4 days.
Looking at the global uncertainties, Ambala advises all traders and investors to remain cautious and consider waiting before making fresh investments or averaging existing positions.
According to her, Nifty can expect support levels between 23,850 and 24,600 and face resistance around 24,050 and 24,120 in the next session.
Bank Nifty index declined 343.80 points, or 0.69%, to close at 49,748.30 on Tuesday, forming a bearish candlestick pattern on the daily charts.
“Nifty Bank index has ended around the near term support of 49,700 which is the 50% retracement level of the recent upmove. However, since there are no signs of strength seen, a breach of this level could lead to the index continuing its correction towards the 61.8% retracement which is placed around 48,860,” said Ruchit Jain, Lead Research, 5paisa.com.
Hence, he advises to stay cautious and wait for signs of trend reversal. According to Jain, Bank Nifty support levels are 49,370 - 49,000, while the index may face resistance at 50,400 - 51,050 levels.
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.
