Indian stock market benchmark indices, Sensex and Nifty 50, is likely to open flat on Monday tracking mixed global cues.
The trends on Gift Nifty also indicate a flattish start for the Indian benchmark index. The Gift Nifty was trading around 24,225 level, a premium of nearly 10 points from the Nifty futures’ previous close.
On Friday, the domestic equity indices witnessed a broad-based sell-off, with the Nifty 50 ending below the 24,200 level.
The Sensex plunged 662.87 points, or 0.83%, to close at 79,402.29, while the Nifty 50 settled 218.60 points, or 0.9%, lower at 24,180.80.
Nifty 50 formed a bearish candle with a big wick on the downside on a daily chart, indicating strong buying, which came nearing the closing session.
“Nifty 50 is currently trading below all important moving averages which indicates a down trend on all time frames. However, RSI oscillator on Nifty 50 daily chart has reached into the oversold territory, which could result in some pullback from the current levels. In case of pullback, Nifty could retrace back to the levels of 24,600 - 24,650, which happens to be a neckline level of bearish head and shoulder pattern on the daily chart,” said Vinay Rajani, Senior Technical & Derivative Research Analyst at HDFC Securities.
According to him, the primary trend has been bearish and higher levels should be utilized to lighten long commitments.
“Nifty is in a continuation of a downtrend. However, oversold oscillators on the short term charts are indicating chances of recovery from the current levels. Band of 24,600 - 24,650 should be utilized to take fresh short positions and exit long positions. Any level below 23,900 could drag Nifty towards the next positional target of 23,000,” said Rajani.
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 calls at 24,000 and above levels and ITM puts saw short covering, indicating a weakness in the index, noted Dr. Praveen Dwarakanath, Vice President of Hedged.in.
Nifty 50 continued its downward journey for the fifth consecutive session on October 25 and ended 218 points lower. Nifty 50 was down 2.58% for the last week and this was the fourth consecutive week of falling.
“On the lower side, Nifty 50 will find strong support around 24,000 levels as maximum put writing has been seen around those levels whereas on the higher side, call writing at 24,400 and 24,500 will act as immediate resistance for the index. Most of the technical parameters are in oversold zone and short covering pullback from current levels can be seen that can take index towards 24,350 / 24,440 levels,” said Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth.
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas, noted the Nifty 50 has reached 24,000 – 24,050 which coincides with a psychological support as well as the daily lower Bollinger band which shall restrict a sharp decline from heron.
“The trend remains negative, however, there can be a pullback towards 24,350 towards key hourly moving averages which should be used as a selling opportunity. On the downside, 24,000 is likely from a short term perspective,” Gedia said.
VLA Ambala, Co-Founder of Stock Market Today advises traders to adopt a “sell on rise” approach to align with the current market trend for the upcoming weeks.
“In addition, Nifty formed a “Bearish Belt Hold” candlestick pattern below the 20-week EMA (Exponential Moving Average) and traded nearly 4% below the 50-day EMA on Friday. Amid these developments, Nifty could find support between 24,150 and 24,000 and resistance between 24,315 and 24,430. However, given the current market environment, I suggest medium-term investors consider dip buying in parts near the 50-week EMA,” Ambala said.
Bank Nifty index witnessed a severe decline of 743.70 points, or 1.44%, on Friday and closed the session at 50,787.45, forming a bearish candle.
“Bank Nifty broke its support at 51,000 levels, indicating weakness to continue further. Immediate support for Bank Nifty is at 50,500 levels, from where the bounce has come towards the end of the session. The momentum indicators on the daily and weekly charts continue to show weakness in the index,” said Dr. Praveen Dwarakanath.
According to him, Bank Nifty formed a bearish candle with a big wick at the bottom, showing signs of recovery, however, any bounce can be used as an opportunity to sell at the higher levels.
“Immediate resistance for the index is at 52,000 levels. Options writer's data showed writing calls above 50,800 levels and ITM puts saw short covering, indicating a weakness to continue in the index,” Dwarakanath added.
Aditya Agarwal highlighted that on the lower side, Bank Nifty found some buying interest around its next support zone of 50,400 and saw pullback from those levels.
“Short term structure for Bank Nifty has weakened and it will continue to find strong resistance around 51,000 / 51.200 levels. A break below 50,400 will further put pressure on the index and in that case it can correct towards 49,800 / 49,400 levels,” Agarwal said.
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