Sensex and Nifty 50, indicating a lower opening, influenced by weak global cues. As the Gift Nifty traded around 22,950, about 50 points lower than the Nifty futures’ previous close, market participants are bracing for a day of cautious optimism.
On Thursday, the domestic equity indices soared to record highs, with the Sensex surging 1,196.98 points to close at 22,967.65, while the Nifty 50 climbed 369.85 points to settle at 75,418.04. The impressive rally was underpinned by strong buying interest, as evidenced by the formation of a long bullish candlestick pattern on the daily charts. This pattern is often seen as a harbinger of continued upward momentum, suggesting that investor sentiment remains robust.
Technical analysts are closely monitoring the moving averages, with the 20-period moving average currently above the 50-period MA, a positive signal indicating that the near-term uptrend is likely to persist.
The Nifty 50 has managed to stay above the crucial 20-day and 50-day simple moving averages, further reinforcing the bullish outlook. The 14-day RSI is at 68.23, a level that is rising but not yet in overbought territory, suggesting there is still room for further gains.
Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities, notes that while further upsides and new highs are anticipated in the lead-up to the general election results, short-term consolidations should not be ruled out. He emphasizes that the overall trend remains strong, with the Nifty expected to find support around the 22,800 level, while resistance levels are eyed at 23,500 and above.
Mandar Bhojane, Research Analyst at Choice Broking, provides insight into the options market, highlighting significant open interest (OI) concentrations at the 22,700 level for puts, indicating potential support, and at 23,500 and 24,000 levels for calls, suggesting where resistance might be encountered. This OI data offers a glimpse into market participants’ expectations and helps traders position themselves accordingly.
The Nifty 50’s rally on May 23, which saw the index rise 1.64%, brought it tantalizingly close to the 23,000 mark, missing it by just seven points. Rupak De (Senior Technical Analyst at LKP Securities) describes this as a clean breakout above a prolonged consolidation phase on the daily timeframe. He notes that the trend appears very strong, with the formation of a large green candle on the daily chart signaling renewed optimism. According to De, the index could move towards 23,500 in the short term, provided it remains above the key support at 22,800.
Bank Nifty also witnessed a significant move, jumping 987 points to close at 48,769. This surge was driven by renewed bullish sentiment, lifting the index above 48,500. De suggests that further gains towards 49,500 are possible, as long as the support at 48,500 holds. Immediate resistance for Bank Nifty is seen at 49,000.
Investors are advised to stay invested, hedge their positions, and diversify their portfolios to take advantage of the potential upside. V.L.A. Ambala (Co-founder of Stock Market Today) believes that the current rally could gain support between 22,850 and 22,770, with resistance likely between 23,340 and 23,150. She emphasizes the importance of midcap and smallcap movements, which are expected to play a crucial role in driving the market higher.
While a lower opening is anticipated, the overall market sentiment remains positive. With strong technical indicators and bullish patterns, the Indian stock market seems well-positioned for further gains, provided key support levels hold and global cues do not deteriorate further. Investors should remain vigilant and adapt their strategies to navigate the ever-changing market landscape.
