Indian stock market indices, Sensex and Nifty 50, are likely to open lower on Thursday following weak global cues amid escalating tension in the Middle East and worries over full fledged war between Iran and Israel.
The trends on Gift Nifty also indicate a gap-down start for the Indian benchmark index. The Gift Nifty was trading around 25,720 level, a discount of nearly 255 points from the Nifty futures’ previous close.
On Tuesday, the Indian stock market indices ended the volatile session flat with a negative bias.
The Sensex eased 33.49 points to close at 84,266.29, while the Nifty 50 settled 13.95 points, or 0.05%, lower at 25,796.90.
Nifty 50 formed a small candle on the daily chart with upper shadow.
“Technically, this pattern indicates a sell on rise opportunity in the market. But, the sharp follow-through selling momentum was absent on Tuesday. The positive chart pattern like higher tops and bottoms is intact on the daily chart and the present weakness in the market is in line with the new higher bottom formation of the pattern. The higher bottom reversal needs to be confirmed,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
Shetti believes the near term uptrend status of Nifty 50 remains intact and the market is currently shifted into a short term downward correction. Nifty is expected to find support around 25,500 - 25,400 levels in this week and could witness a sustainable upside bounce from the lows.
Here’s what to expect from Nifty 50 and Bank Nifty today:
In terms of Nifty open interest (OI), the highest call-side OI was seen at the 26,000 and 26,200 strike prices, while the highest put-side OI was concentrated at the 25,500 strike price, indicating strong support around the 25,600 level for Nifty, said Mandar Bhojane, Technical Research Analyst at Choice Broking.
Nifty 50 consolidated on October 1 amidst a range movement and closed the day lower by 13 points.
“Nifty 50 formed a doji pattern with a long upper shadow on the daily chart, indicating market indecision. Heavy call writing at 25,800 suggests it may act as strong resistance if sustained. Immediate support lies at 25,750, and a decisive break below this could push the index to 25,600 / 25,500. On the higher side, a move above 25,800 may propel Nifty towards 26,050, where sellers could become active again,” said Rupak De, Senior Technical Analyst, LKP Securities.
VLA Ambala, Co-Founder of Stock Market Today noted that the Nifty 50 index formed a bearish “Dark Cloud Cover” candlestick pattern at all-time highs.
“The index is still in the overbought zone, as seen from its monthly RSI reading, which is above 83. Nifty has fallen nearly 2% in three trading sessions, and its current movements suggest that it is likely to see more profit-booking activities. According to my analysis, traders should look for a ‘sell on rise’ strategy. Since Nifty is trading at around 1% of its 20-day EMA, market participants can target the range if they are waiting for a sell-on rise. I would advise to track this for 1-3 days to make the most of the latest developments,” Ambala said.
Considering these aspects, she expects the benchmark Nifty 50 to gain support between 25,700 and 25,550 and face resistance between 25,830 and 25,925.
Dr. Praveen Dwarakanath, Vice President of Hedged said that the Nifty 50 consolidated near the previous closing, indicating a small halt in the fall and Tuesday’s low of 25,740 level can act as immediate support from the index.
“ADX DI+ line on the daily chart is almost on the verge of crossing the ADX average line, indicating weakness to continue. The momentum indicators also show a small room on the downside as they are closer to the oversold region. Options writer’s data showed increased call writing in the present week's expiry above 25,800 levels, indicating a possible closing below this level,” Dwarakanath said.
Bank Nifty index ended 55.50 points, or 0.1%, lower at 52,922.60 on Tuesday, forming a small bullish candlestick pattern.
“Bank Nifty tested its support at 52,800 levels, a break of this can push it down further to 52,000 or 51,200 levels. Momentum indicators are pointing towards a small room for a further fall, as two days of fall have pushed the momentum indicators to the oversold region,” said Dwarakanath.
According to him, Bank Nifty options writer's data shows increased writing at 53,000 levels, indicating a pause in the fall at the present levels, however, an increased call writing indicates weakness to continue, making the bias in Bank Nifty, sideways to the downside.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
