Indian stock market indices, Sensex and Nifty 50, are likely to open higher after the US Federal Reserve’s outsized interest rate cut improved investor sentiment.
The trends on Gift Nifty also indicate a positive start for the Indian benchmark index. The Gift Nifty was trading around 25,400 level, a premium of nearly 30 points from the Nifty futures’ previous close.
The US Fed kicked off its monetary easing cycle with a 50 basis points interest rate cut to a range of 4.75% to 5.00% citing a “greater confidence” that inflation was moving toward the central bank’s 2% target.
On Wednesday, the domestic equity indices ended lower amid profit booking at record high levels.
The Sensex fell 131.43 points to close at 82,948.23, while the Nifty 50 settled 41.00 points, or 0.16%, lower at 25,377.55.
Nifty 50 formed a small negative candle on the daily chart with upper and lower shadow, which is indicating high volatility in the market.
“An attempt of downside breakout of the narrow range movement of the last three sessions could be in the place of false downside breakout. Further upmove from here could confirm the same,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
According to him, the short-term trend of Nifty 50 remains positive with range bound action and any dips down to the support of 25,200 - 25,100 is expected to be a buying opportunity. A decisive upmove above 25,500 levels could pull Nifty towards the higher targets.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Nifty Open Interest (OI) data showed the highest OI on the call side at the 25,500 and 25,600 strike prices, while on the put side, it was concentrated at the 25,300 and 25,200 strike prices, noted Hardik Matalia, Derivative Analyst, Choice Broking.
Nifty 50 shifted into a high volatility at the new highs on September 18 and closed the day lower by 41 points.
“The Nifty 50 index reached a new all-time high ahead of the important announcement from the Federal Reserve about interest rates. However, some traders decided to take profits at these higher levels, which caused the market to close about 130 points below its peak for the day.
Lately, Nifty has been moving within a small range. On the downside, there is support at 25,300. If Nifty falls below this level, it could lead to a further drop towards the 24,900 - 25,000 range,” said Rupak De, Senior Technical Analyst, LKP Securities.
On the upside, he believes, 25,500 is acting as a resistance level, meaning it may be difficult for the market to move above this point in the short term.
Aditya Agarwal, Head of Derivatives and Technical at Sanctum Wealth noted that on higher side, aggressive call writing has been seen at 25,500 strike option and that will act as stiff resistance for Nifty and move towards those levels can be used to book profit in trading long positions.
On the lower side, 25,250 will act as strong support for the index and below that it can correct towards 25,100 levels, Agarwal said.
VLA Ambala, Co-Founder of Stock Market Today said that Nifty 50 and Sensex touched their new all-time highs but could not sustain the levels, forming a “high wave” candlestick pattern on the daily chart. Despite this development, she believes, the overall trend remains bullish.
“However, I advise caution as the market is trading in an overbought zone, with Nifty RSI exceeding 80 on the monthly timeframe and 70 on the weekly timeframe. Both index and gold are trading at an all-time high, suggesting ongoing geopolitical tensions and recession fears.
Considering these market conditions, I recommend investors look for high-quality, growth-oriented assets. This approach is especially recommended for those with a shorter investment horizon of less than 2 years to reduce potential risks,” said Ambala.
Based on these situations, the Nifty index could expect support levels around 25,290 and 25,150 and notice resistance between 25,410 and 25,490 in the next session, she added.
Bank Nifty outperformed frontline indices and closed 561.75 points, or 1.08%, higher at 52,750.40 on Wednesday, forming a long bullish candlestick pattern on the daily timeframe.
“Bank Nifty continued to outperform broader markets and closed above 52,500 levels with gains of more than 1%. Overall, the structure for Bank Nifty looks positive and it can test its previous All Time High of 53,350 in this move. On the lower side 52,400 - 52,150 will act as immediate support and dips towards those levels can be used to initiate fresh long positions,” Aditya Agarwal said.
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.
