Indian stock market indices, Sensex and Nifty 50, are likely to see a muted opening on Friday tracking mixed cues from global markets.
The trends on Gift Nifty also indicate a flat start for the Indian benchmark index. The Gift Nifty was trading around 24,450 level, a discount of nearly 2 points from the Nifty futures’ previous close.
On Thursday, the domestic equity market indices ended choppy session flat with a negative bias.
The Sensex eased 16.82 points, or 0.02%, to close at 80,065.16, while the Nifty 50 settled 36.10 points, or 0.15%, lower at 24,399.40.
Nifty 50 formed a small negative candle on the daily chart at the new swing lows of 24,341 with minor upper and lower shadow.
“Technically, this pattern is indicating a formation of doji type candle pattern (not a classical one). Normally, a formation of doji after a reasonable upmove or down moves are considered as an impending reversal pattern on either side post confirmation. After the formation of inverted hammer type candle on Wednesday, Nifty forming a doji type candle pattern on Thursday could indicate that the bulls are preparing to comeback from the lower levels,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
Additionally, absence of sharp selling momentum at the lows in the last couple of sessions is also signaling the chances of an upside bounce, he added.
“The short-term trend of Nifty 50 remains negative. But the present pattern formation is signaling a possibility of an upside bounce from here or from slightly lower levels. A sustainable move above 24,600 - 24,700 levels could confirm the quantum of upside bounce in the market. However, a slide below 24,300 could trigger more weakness for the near term,” Shetti said.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Nifty options writer’s data for the monthly expiry showed increased writing of puts and calls at 24,400 levels but more calls being written, indicating a view of sideways to the downside in the index for tomorrow, said Dr. Praveen Dwarakanath, Vice President of Hedged.in.
Nifty 50 shifted into a narrow range movement on October 24 and closed the day lower by 36 points.
“On the daily charts we can observe that the Nifty 50 has been falling since the last four trading sessions and as a result appears a bit oversold. This can lead to a pullback towards the 24,550 – 24,600 zone where the key hourly moving averages are placed. We expect the selling pressure to emerge again and, hence, any pullback towards the resistance zone should be considered as a selling opportunity,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.
On the downside, he believes 24,200 - 24,000 is likely from a short term perspective.
Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth also noted that most of the technical indicators are in an oversold zone from a short term perspective, and are indicating a short covering move in the index.
“However, any pullback in Nifty 50 will be short lived as overall medium term structure remains weak. A short covering move towards 24,620 / 24,740 levels can be used as an exit opportunity from short term trading positions and initiate fresh shorts. On the lower side, the index will find immediate support around 24,320 / 24,240 levels,” Agarwal said.
According to VLA Ambala, Co-Founder of Stock Market Today, price momentum suggests that over the next 20 to 25 days, Nifty 50 could perform and move nearly 5% from this key range.
“After analyzing the technical and fundamental indicators, a “sell on rise” approach is advisable for market participants. Notably, the intraday RSI stands at 32, which could create a dip-on-buying opportunity with limited exposure in the coming session. However, market participants must note that the overall trend is still weak. Amid these developments, the Nifty index can find support between 24,250 and 24,100 with resistance around 24,490 to 24,550,” Ambala said.
Bank Nifty index outperformed the frontline indices and closed 292.15 points, or 0.57%, higher at 51,531.15 on Thursday, forming a bullish candlestick pattern on the daily timeframe.
“Bank Nifty once again respected its support zone of 51,200 and saw short covering move from lower levels and managed to close above 51,500 levels. On the higher side, Bank Nifty will find immediate resistance around 51,750 levels and above that move towards 52,060. However, Call writing at 52,000 will act as a stiff resistance zone for the index and can see profit booking from those levels. On the lower side 51,100 / 50,800 will continue to act as a support zone for the index,” said Aditya Agarwal.
According to Dr. Praveen Dwarakanath, immediate support for the Bank Nifty index is at the 51,000 level and the resistance is at 52,000 levels.
“A break of one of these levels can be decisive for further price action in the index. The momentum indicators on the weekly chart continue to show weakness in the index. Options writer's data showed writing calls above 51,400 levels and puts below 51,400 levels, indicating a rangebound index,” Dwarakanath said.
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