The Indian stock market indices, Sensex and Nifty 50, are likely to open flat on Friday, amid positive cues from global peers after the US Federal Reserve cut the benchmark interest rates by 25 basis points (bps), in line with expectations.
The trends on Gift Nifty also indicate a flat start for the Indian benchmark index. The Gift Nifty was trading around 24,290 level, a discount of nearly 10 points from the Nifty futures’ previous close.
On Thursday, the domestic equity market ended with steep losses, with both the benchmark indices ending over a percent lower each.
The Sensex cracked 836.34 points, or 1.04%, to close at 79,541.79, while the Nifty 50 settled 284.70 points, or 1.16%, lower at 24,199.35.
Nifty 50 formed a long negative candle on the daily chart after the upside bounce of the last two sessions.
“The crucial overhead resistance of 24,500 remained intact and the market was not able to sustain above the resistance area. Though, technically this candle pattern is not showing any signs of bigger decline from here but some more consolidation or minor dip is expected towards 23,800 or slightly lows,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
According to him, the short-term trend remains dicey with short-term volatility in the market.
“Until Nifty surpasses above 24,500 levels, meaningful upside rally is not expected. At the lows, the Nifty could find support around 23,800 levels,” Shetti added.
Here’s what to expect from Nifty 50 and Bank Nifty today:
On the Nifty option front, Maximum Call OI is at 24,500 then 25,000 strike while Maximum Put OI is at 23,000 then 24,000 strike. Call writing is seen at 24,500 then 24,200 strike while Put writing is seen at 24,200 then 24,000 strike.
Option data suggests a broader trading range in between 23,500 to 24,500 zones while an immediate range between 23,800 to 24,200 levels, said Chandan Taparia, Head, Equity Derivatives & Technicals, Wealth Management, MOFSL.
Nifty 50 tumbled down from near the hurdle on November 7 and closed the day lower by 284 points.
“On the daily charts, we can observe that the Nifty 50 index has faced selling pressure from the upper end of the falling channel. The daily momentum indicator has a positive crossover which is a buy signal and the Nifty is trading around the key hourly moving averages i.e. around support which makes it a buy setup. We shall hold on to our bullish outlook for the Nifty for targets of 25,350 from a short term perspective. On the downside 24.000 shall act as a crucial support level,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.
Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth noted that Nifty 50 failed to sustain above its resistance zone of 24,500 and saw profit booking from higher levels that dragged the index below 24,200 levels.
“Weekly expiry further added pressure on markets and indices closed almost at days low levels. From a short term perspective, Nifty 50 is expected to consolidate between 24,000 - 24,500 levels with no clear direction. Dips towards 24,120 - 24,040 can be used to initiate fresh longs, whereas, moves towards 24,450 - 24,500 can be used to book profits in trading longs,” said Agarwal.
Dr. Praveen Dwarakanath, Vice President of Hedged.in is of the view that Nifty 50 closing below its 10 DMA has further strengthened the downside trend.
“Weekly momentum indicators continue to signal a further decline in the index. Trend lines suggest that if the support at 23,800 is breached, the index could quickly fall towards the 23,000 level. Options writer data for next week's expiry shows increased call writing above the 24,200 level, reinforcing the weakness in the index,” said Dwarakanath.
Bank Nifty index ended 400.90 points, or 0.77%, lower at 51,916.50 on Thursday, forming a red candle on the daily charts with a lower top-lower bottom formation.
“Bank Nifty faced rejection around the 52,500 mark and has witnessed some profit booking. However, it has held on to its crucial support zone of 51,750 – 51,650 and we expect the undertone to remain sideways to bullish from a short term perspective,” said Jatin Gedia.
On the upside, resistance is placed at the gap zone for med on the 3rd October in the range 52,650 – 52,850, he added.
According to Dr. Praveen Dwarakanath, Bank Nifty found support during the day's fall at the 30 DMA and managed to close above it. However, it continues to face resistance around the 52,500 level, indicating persistent weakness.
“A break below the 51,000 level could trigger a decisive move towards 49,500. Momentum indicators are pointing to further downside potential in the index. For the weekly expiry, options data shows increased call writing at 52,000 and above, suggesting a likely downtrend for the index,” he said.
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