Sensex and Nifty 50 are expected to open higher. This comes after a tumultuous session on Thursday, where both indices ended the day significantly lower. The trend in the Gift Nifty also points towards a positive opening, as it was trading around the 22,690 level, a premium of nearly 60 points compared to the Nifty futures’ previous close.
Thursday was marked by notable losses in the Indian stock market, with the domestic equity indices closing sharply lower amid the monthly F&O expiry. The Sensex plunged 617.30 points to close at 73,885.60, while the Nifty 50 settled 216.05 points, or 0.95%, lower at 22,488.65.
This decline extended the losses for the fifth session in a row. The Nifty 50, in particular, formed a bearish candlestick pattern with upper and lower shadows on the daily timeframe, indicating continued market uncertainty.
In analyzing Thursday’s performance, it becomes evident that the uptrend has weakened significantly. The Nifty’s negative closing has led to it dropping below the previous swing high of 22,795. The 14-day RSI stands at 51.1 and is falling, remaining below its 9-day EMA. This suggests that momentum is weakening. Despite this, the Nifty continues to hold above the 20 and 50-day SMA, which offers some hope for a potential bounce back.
According to Subash Gangadharan (Senior Technical/Derivative Analyst at HDFC Securities), the Nifty’s recent performance opens up the possibility of a further rebound in the coming sessions. For this to happen, however, the Nifty would need to cross the immediate resistance of 22,706 for the bulls to gain an upper hand.
Critical support levels to watch for a resumption of weakness are at 22,417 to 22,387. The market is likely to remain volatile as we approach the election result announcement, adding another layer of uncertainty to the current market scenario.
Nifty Open Interest data reveals some interesting trends. On the call side, the highest OI is observed at the 23,000 strike price, followed by the 23,500 strike price. On the put side, the highest OI is at the 22,000 strike price. This data suggests that traders expect a significant move in the Nifty, with considerable positions being taken at these levels.
The Nifty 50 index closed with a loss of 216 points below the 22,500 level on May 30. Rupak De (Senior Technical Analyst at LKP Securities) noted that the Nifty has remained volatile during the session with predominant bearishness. The sentiment for the short term remains weak as the index slipped below the critical 21-day EMA.
Significant call writing activity was observed at the 22,500 level, which means that to witness a meaningful recovery, the Nifty must sustain above this level. Failure to do so might attract fresh selling, potentially driving the index towards 22,300 or even 22,100.
The Bank Nifty index outperformed the Nifty 50 on Thursday, closing 181 points higher at 48,682. Despite forming a bearish candle on the daily chart, indicating ongoing bearish pressure, the index found support near its 21-day EMA after a gap-down opening.
A large-cap private bank stocks recovery contributed to keeping the index in the green. The critical support level for Bank Nifty is at 48,300, while 49,000 serves as strong resistance. A decisive movement is anticipated once these levels are breached.
The market dynamics reflect a mix of caution and optimism. While the recent declines have been sharp and extended, technical indicators suggest that there could be a potential rebound. This will heavily depend on the market’s ability to break through the identified resistance levels and hold critical support levels.
As we look ahead to Friday’s trading session, it’s clear that the Indian stock market is at a critical juncture. Investors will keenly watch the opening bell and early trading patterns to gauge the market sentiment. The interplay between the technical indicators, the ongoing F&O expiry dynamics, and the broader economic and political developments will continue to shape the market’s trajectory.
While the market has shown signs of weakening momentum, the underlying support levels provide a cushion for potential recovery. The key will be for the Nifty 50 to break through immediate resistance and sustain those levels to avoid further sell-offs. Investors are advised to stay cautious and keep a close eye on the technical indicators and market trends to navigate the current volatility.
Disclaimer: The views and predictions made in this article are based on the analysis of market experts and the current market trends. Investors are advised to consult with certified financial advisors and conduct their own research before making any investment decisions. Market conditions are subject to change, and past performance is not indicative of future results. The information provided is for informational purposes only and should not be construed as financial advice.
