The Indian stock market benchmark indices, Sensex and Nifty 50, are likely to open higher on Friday, following gains in global markets.
The trends on Gift Nifty also indicate a positive start for the Indian benchmark index. The Gift Nifty was trading around 23,440 level, a premium of nearly 90 points from the Nifty futures’ previous close.
On Thursday, the domestic equity benchmark indices ended over half a percent lower each, with the Nifty 50 closing below 23,400 level.
The Sensex fell 422.59 points, or 0.54%, to close at 77,155.79, while the Nifty 50 settled 168.60 points, or 0.72%, lower at 23,349.90.
Nifty 50 formed a reasonable negative candle on the daily chart with minor lower shadow.
“Technically, this market action signals a downtrend continuation pattern as per bearish sequence like lower tops and bottoms on the daily timeframe chart. The crucial 200-day EMA (Exponential Moving Average) support has been broken again around 23,500 levels after a recent failed upside bounce. The short-term market action post this downside breakout is going to be crucial,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
According to him, if Nifty fails to show any sharp weakness in the next 1-2 sessions, then chances of another upside bounce could come into play.
“The short-term trend of Nifty 50 continues to be weak and the market is expected to slide down to 23,200 - 23,100 levels in the near term,” said Shetti.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Nifty 50 continued its downside momentum on November 21 and closed the day lower by 168 points.
“Nifty 50 index remained below the 200-DMA, indicating persistent weak sentiment in the market. The RSI indicator has reentered a bearish crossover, further supporting the negative sentiment. In the short term, sentiment remains weak, with support placed at 23,200. A fall below this level could trigger a correction in the market. On the upside, resistance is placed at 23,550; a decisive move above this level might induce a rally in the market,” said Rupak De, Senior Technical Analyst, LKP Securities.
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas observed that on the daily charts, the Nifty 50 witnessed follow-through selling pressure from the previous trading session.
“It has breached the low of 23,350 and is now heading towards 23.180. On the upside 23,500 which is the 20-day moving average shall act as an immediate hurdle zone from a short term perspective,” Gedia said.
VLA Ambala, Co-Founder of Stock Market Today noted that Nifty 50 has plunged almost 12% in the past two months and could fall another 4% to 5% in the coming weeks.
“The index is 5% below its 20-month EMA, with a monthly RSI of 62. In such situations, I recommend investors adopt a ‘sell on rise’ strategy. In intraday, Nifty closed near the 23,350 level, forming a bearish ‘Marabozu’ candlestick pattern. So, in the next session, Nifty could hover near support at 23,180 and 23,100 and meet resistance around 23,360 and 23,440,” Ambala said.
Bank Nifty declined 253.60 points, or 0.5%, to close at 50,372.90 on Thursday, forming a bearish candlestick pattern with a long lower shadow on the daily charts.
“Bank Nifty made a sharp fall during the start of the sessions and broke 50,000 levels, however, quickly recovered back, showing strength in the index when compared to Nifty. The momentum indicators on the weekly continue to show weakness in the index, indicating the index is likely to test its crucial support at 49,500 levels. A break of the 49,500 level can bring the index down to 48,000 levels very soon,” said Dr. Praveen Dwarakanath, Vice President of Hedged.in.
According to him, options writer's data of monthly expiry showed increased writing in the puts of 50,500 and below and call writing of the 50,500 and above levels, indicating a range-bound move at the present levels.
“Bank Nifty tested the 200-day moving average (49,800) and witnessed buying interest from that support level. It closed in the negative down ~253 points though well off the intraday lows. The crucial support zone is thus placed at 50,000 – 49,800 while resistance is placed at 50,900 – 51,000,” said Jatin Gedia.
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