Indian stock market indices, Sensex and Nifty 50, are likely to open on a cautious note on Thursday tracking weak 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 24,540 level, a premium of nearly 60 points from the Nifty futures’ previous close.
On Wednesday, the domestic equity market indices ended the volatile session with marginal losses.
The Sensex fell 0.17% to close at 80,081.98, while the Nifty 50 settled 36.60 points, or 0.15%, lower at 24,435.50.
Nifty 50 formed a small positive candle on the daily chart with upper shadow.
“Technically, this formation indicates a type of bullish inverted hammer type candle pattern, not a classical one. A sustainable move above the high of this pattern at 24,605 could confirm the positive pattern for the short term. Negative chart pattern like lower tops and bottoms is intact as per daily timeframe chart. Having declined from the recent lower top of 24,978 on 21st October, there is a probability of minor upside bounce in the short term to form a new lower top of the sequence,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
According to Shetti, the underlying trend of Nifty 50 remains weak and having placed around the crucial supports as per weekly chart, one may expect chances of an upside bounce from here or from the lows.
“A sustainable close only above 24,650 - 24,700 levels could confirm upside bounce. However, a slide below 24,350 is likely to drag Nifty down to 24,000 mark in the near term,” Shetti said.
Here’s what to expect from Nifty 50 and Bank Nifty today:
In terms of open interest (OI), the highest call-side OI was observed at the 24,600 and 24,500 strike prices, marking significant resistance levels. On the put side, the highest OI was concentrated at the 24,400 and 24,300 strike prices, indicating strong support around the 24,350 level, noted Mandar Bhojane, Equity Analyst at Choice Broking.
“Overall, the market's current technical setup suggests short-term weakness, although key support levels may provide a foundation for a potential rebound,” Bhojane said.
Dr. Praveen Dwarakanath, Vice President of Hedged.in is of the view that the Nifty 50 has closed near its support level of 24,400, and a breach of this level can take the index down to 24,000 levels.
“On the daily chart, the ADX average line has started to slope upside with the ADX DI- line on top of the ADX DI+ line, indicating weakness to continue. Options writer's data for today’s expiry shows puts written below 24,400 and calls written above 24,400, indicating a rangebound move for today, while the monthly expiry showed increased writing of puts and calls at 24,500 also indicating a rangebound index for tomorrow,” said Dwarakanath.
Nifty 50 shifted into a consolidation on October 23 and closed the day lower by 36 points.
“Daily as well as hourly momentum indicators have a negative crossover which is a sell signal. Thus, considering the price and momentum indicator we expect the rangebound price action to continue. The range is likely to be 24,400 – 24,750. Sell on rallies to 24,680 – 24,750 is the preferred trading strategy for the target of 24,200 – 24,000,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.
According to Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth, the overall structure remains bearish and any pullback move towards 24,580 - 24,660 can be used as an exit opportunity from trading long positions and initiating fresh shorts.
“On the lower side, Nifty 50 will find immediate support around 24,300 and below that can correct towards 24,120 levels,” Agarwal said.
Despite Wednesday’s bull attempt, Nifty 50 formed a bearish candlestick pattern at a daily timeframe below its 20 and 50-day EMA (Exponential Moving Average) as well as the 20-week EMA, said VLA Ambala, Co-Founder of Stock Market Today
“Amid the current market situation, Nifty can expect support near 24,135 and 23,920 and resistance near 24,440 and 24,590 in the next session,” Ambala said.
Bank Nifty index ended 18.15 points, or 0.04%, lower at 51,239.00, forming a Bullish Inverted Hammer pattern on the daily chart.
“Bank Nifty is trading near its crucial support zone of 51,000 / 50,800 levels and can see pullback from those levels on the back of buying interest in private sector banking stocks. However, a close below 50,800 will weaken the overall structure of Bank Nifty and in that scenario, it can reach 50,200 / 49,600 levels,” said Agarwal.
On the higher side, Agarwal expects Bank Nifty to find strong resistance around the 51,800 / 52,240 range and move towards those levels that can be used to book profit in trading longs.
Gedia expects the overall trend to remain negative and the pressure to persist from a short term perspective. He expects Bank Nifty to drift lower towards 50,500 from a short term perspective.
Praveen Dwarakanath of Hedged.in noted that the Bank Nifty index has been rejected from the 20 EMA, indicating weakness to continue in the index.
“The momentum indicators on the weekly chart are showing weakness to continue in the short term. Options writer's data showed increased writing in a few of the ITM puts and increased writing in the calls above 51,300 levels in the monthly expiry, indicating weakness to continue in the index,” Dwarakanath said.
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