Indian stock market benchmark indices, Sensex and Nifty 50, are likely to open lower on Monday tracking weakness in global equities.
The trends on Gift Nifty also indicate a negative start for the Indian benchmark index. The Gift Nifty was trading around 24,843 level, a discount of nearly 66 points from the Nifty futures’ previous close.
On Friday, the domestic equity market indices ended sharply lower, with the benchmark Nifty 50 closing below 24,900 level.
The Sensex plunged 1,017.23 points, or 1.24%, to close at 81,183.93, while the Nifty 50 settled 292.95 points, or 1.17%, lower at 24,852.15.
Nifty 50 formed a long bear candle on the daily chart, which is indicating a sharp downside reversal for the market.
“The cluster support of 25,000 has been broken decisively on the downside and Nifty closed lower. This pattern is indicating a confirmation of short-term top reversal pattern at 25,333 levels. Nifty on the weekly chart formed a long bear candle that has engulfed the previous long bull candle completely. This pattern could be considered as a 'Bearish Engulfing' pattern and this is a negative indication for the market ahead,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He believes the short-term uptrend of Nifty 50 seems to have reversed down and the market is expected to shift into near term downward correction ahead.
“Having broken below the immediate support at 25,000 levels, the next lower support is placed around 24,500. Immediate resistance is at 25,050,” Shetti added.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Nifty 50 witnessed sharp decline on September 6 and closed the day lower by 292 points below the 24,900 level.
“Nifty saw selloff in Friday’s trades and closed below its support level of 25,050. From a short term perspective, Nifty will find strong resistance around 25,050 - 25,100 levels, and move towards those levels can be used to reduce trading long positions,” said Aditya Agarwal, Head of Derivatives and Technical at Sanctum Wealth.
On the lower side, he believes the index will find strong support around 24,760 and below that can see further corrections that can drag Nifty towards 24,600 levels.
Praveen Dwarakanath, Vice President, Hedged.in noted that Nifty has weekly support at 24,770 levels, a break of which can take Nifty to 24,350 levels.
“Nifty has created an engulfing candle on the weekly chart, indicating bearishness in the index. On the weekly chart, RSI negative divergence is evident, suggesting further downside in the index from the present levels. Option writer’s data for September expiry shows short covering in the puts and increased writing in OTM calls. No significant writing was seen in ITM calls, indicating a possible halt of fall at the weekly support of Nifty at 24,770 levels,” said Dwarakanath.
VLA Ambala, Co-Founder of Stock Market Today noted that Nifty breached its key support at 25,000, leading to an expected market sell-off amid weaker global conditions.
She expects the Nifty 50 index could find support levels around 24,760 and 24,630, whereas resistance will likely be between 25,000 and 25,100 in today’s session.
Bank Nifty index cracked 896.20 points, or 1.74%, to close at 50,576.85 on Friday, and formed a bearish candle on the weekly chart.
“Bank Nifty has a weekly support at 50,400 level, a break of which can take Bank Nifty to 49,300 levels. Bank Nifty has created a strong bearish candle on the weekly chart, indicating weakness in the index. On the weekly chart, RSI shows the momentum on the downside picking up. ADX on the weekly chart shows no clear direction, indicating a possible recovery from the fall,” said Dwarakanath.
Option writer's data for September expiry increased writing in OTM calls. No significant writing was seen in ITM calls or OTM puts, indicating a possible halt of fall at the weekly support of Bank Nifty at 50,400 levels, he added.
Aditya Agarwal noted that Bank Nifty underperformed broader indices in the last trading session and closed below its 13 DEMA.
“Short term structure has deteriorated for index and below 50,400 can see correction towards 50,000 levels. On the higher side, Bank Nifty will find resistance around 50,900 - 51,100 levels and can see selling pressure around those levels,” Agarwal said.
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