Indian market indices for stocks, Sensex and Nifty 50, are scheduled for a tepid beginning on Thursday, influenced by various global market developments.
It was reported that the GIFT Nifty was trading near the 25,025 mark, suggesting a discount of around 10 % from Nifty Futures’ previous close.
This Wednesday, the US equity market experienced its second day of decline in a row. The Sensex fell by 318.76 points and closed at 81,501.36, while the Nifty 50 lost 86.05 points and closed at 24,971.30. The general market sentiment remained prudent, with a tiny negative candle within daily charts.
A slight upper shadow accompanied it. This pattern indicates a market prone to fluctuation, particularly with the Nifty remaining near its lower 24,900 level.
According to the technical analyst Nagaraj Shetti from HDFC Securities, the break of Nifty 50’s below its 10 – and 20-period EMAs is significant as these levels are now turning into resistance zones, ranging from 25,150-25,200.
The ongoing battle between these levels will determine the market’s direction, and further movements are likely if the Nifty price stays above 25,200 or below 24,700.
Also read: Market Outlook and Trade Setup for October 16, 2024: Key Indicators and Open Interest Data
Nifty 50’s Range-Bound Action
The range-bound Nifty 50’s movement that ended at 86 points lower on October 16 suggests the consolidation of a narrow 350-point range between the 24,900- 25,250 range.
A major rise above the 25,250 mark could propel the index towards the 25,500 area, whereas falling below 24,900 could cause it to fall back to 24,300.
The technical indicators indicate an upward shift towards the overbought area, suggesting possible downward pressure from current levels.
Dr. Praveen Dwarakanath, Vice President of Hedged, explained that options data indicates an increase in call writing around the 25,000 level, pointing towards a possible expiration below this level. Furthermore, it is rising, indicating an increase in momentum for the downside.
Similarly, the expert in derivatives, Aditya Agarwal of Sanctum Wealth, emphasized that the 24,900 level could be an immediate support. A drop toward this level could provide buying opportunities, especially for large-cap stocks that have begun to show signs of a reversal trend.
VLA Ambala, co-founder of Stock Market Today, highlighted that Nifty and the Sensex are still overbought following an extreme downward slide. Although both indexes have retreated around five percent, there’s plenty of room for further losses.
On Wednesday, Nifty fell below its 20 and 50-day EMAs and formed a High Wave Doji candlestick pattern that could indicate a potential for volatility. The immediate support is at 24,810 and 24,670, with resistance zones in the range of 25,080 and 25,195.
Bank Nifty’s Outlook
Bank Nifty closed lower by 104.95 points on Wednesday, closing at 51,801.05. This index gave off a tiny bullish candle, with a higher shadow in its charts daily. The index failed to stay at the 52,000 resistance level, triggering minor profit bookings.
In the short term, Bank Nifty is displaying positive trends and exhibiting a favorable structure, with corrections towards 51,600 and 51.400 as possible entry points for long-term positions.
On the other hand, there is a possibility of resistance at 52,000. A rise above this threshold could push the index towards 52,600 within the next few days.
Dr. Dwarakanath explained that Bank Nifty is currently being removed by the lower Keltner channel, which weakens these points.
The indicators of overbought momentum also suggest that the market could be headed for a fall toward immediate support of around 51,200.
Options data indicates higher calls and puts writers near 52,000, suggesting a pause in the market. The more pronounced call writing indicates a bias to the downside.
Open Interest (OI) Data and Derivatives Insights
The Nifty 50 index closed 0.3% lower. October’s futures ended 0.3% lower at 25,048, and the open interest (OI) increased 0.8% to 5,48,804 contracts.
This extended range-bound move over the past five days could indicate an eventual consolidation since the index remains within its moving averages of 20 to 100 days.
The OI data for the day’s expiry shows an impressive accumulation of open interest on calls at 25,200 and 25,100 strike prices, suggesting that Nifty could face resistance near these prices. On the other hand, the put’s base of 24,800 and 25,000 suggests strong support zones.
The Bank Nifty October futures fell by 0.1%t and ended at 52,042, with OI falling by 0.6%. The index has generally outperformed the market for the past three days, a few times crossing 52,000 before experiencing profits being booked.
Even though the index is above its vital 100-day and 50-day moving means, it faces substantial selling pressure at 52,000.
A close that is below the 50 DMA could suggest greater downside risk. In contrast, a significant-close of over 52,000 could signal positive momentum, pushing the index to reach 20 DMA.
Global Market Influence
Asian markets had a mixed performance, and Japan’s Nikkei 225 index fell 0.5%. In contrast, Hong Kong’s Hang Seng index rose by 1%. The GIFT Nifty’s trading at a flat rate signifies a slow start for this year’s Indian market.
The major indexes retreated within the US, aided by Morgan Stanley’s impressive Q3 results and a rebound of chip companies.
In the US, the Dow Jones rose 0.7%, the S&P 500 increased by 0.4%, and the Nasdaq Composite advanced by 0.2%. The recovery may provide a boost to the mood of investors around the world. However, Indian markets are still cautious amid uncertain signals from global indices.
FII-DII Activity
Foreign Institutional Investors (FIIs) maintained their selling streak for the 12th time in a row, selling off Rs3,435 crore of Indian equity. On the other hand, Domestic Institutional Investors (DIIs) remain net buyers, buying more than Rs2,256 crore worth.
Also Read: Gold and Silver Rates on October 16: Minor Fluctuations Amid Global Market Movements
The information presented in this article is intended for informational purposes only and should not be construed as financial or investment advice. Stock market investments are subject to market risks and uncertainties, including the potential loss of principal. Readers are advised to conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. The author and publisher are not responsible for any losses or damages arising from the use of this information.