Indian benchmark indexes, such as the Sensex and the Nifty 50, are expected to open lower Today, following the weak global cues and ongoing FII outflows.
In the case of Nifty 50, Gift Nifty indicates a potential gap-down open, trading at 24,750, or around 90 points below the last closing price of Nifty’s futures. These indicators suggest a bearish beginning in Indian markets.
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The Market Report from Thursday
Thursday saw a dramatic decrease in both the Sensex as well as the Nifty 50, driven by selling pressures and fears about the rising interest rates across the globe.
The Sensex dropped by 494.75 points, which is 0.61%, to settle at 81,006.61, and the Nifty 50 fell 221.45 points or 0.89%, before closing at 24,749.85.
The drop has caused the Nifty 50 to go down below the key 24,800 mark, creating the appearance of a bearish candle that is long in the chart for daily trading. The experts at the technical level believe this could indicate further downward pressure in the coming days.
Technical Outlook and Key Levels
The market shows indicators of a slowing momentum, and the Nifty 50 displays a dramatic downtrend after several weeks of range-bound movement.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, highlighted that the short-term trend remains sluggish. Any significant move lower than the 24,700 support zone could result in more declines and even test the 24,500-24,000.400 zone.
Nifty OI Data: Resistance and Support
Open Interest (OI) data for the Nifty 50 indicates that the critical resistance is between the 24,900 and 25,000 levels, with the highest OI being on both sides at the strike levels.
Vital support is at the 24,700-24,500 levels, where OI is heavily concentrated in the direction of the put, indicating these are essential support areas.
Analysts in derivatives Hardik Matalia of Choice Broking explained that a break below 24,700 could cause more selling pressure, which could cause Nifty to fall to lower levels of 24,500 or even 24,400. Traders are advised to be vigilant and use the sell-on-rallies strategy.
Bank Nifty Outlook
It is worth noting that the Bank Nifty also experienced significant selling pressure on Thursday, shedding 512.25 points, which is 0.99%, to end at 51,288.80. A bearish pattern of candlesticks created in the daily trading charts indicates an ongoing downtrend.
Analysts from the technical side point out that this index is trading below its 50 DMA, which is a sign of weakness. Aditya Agarwal, head of Derivatives & Technical Analysis at Sanctum Wealth, noted that Bank Nifty has strong support between 51,000 and 50,800.
The dips towards these levels provide buying opportunities for an inverse pullback that is short-covering. A frenzied call writing at 52,000 strike prices indicates that resistance is still solid at higher levels.
A further negative is possible, particularly if Bank Nifty breaks below 51,000 with possible targets of 50,200 and 49,700 over the near term.
What to Expect
Based on the Dr. Praveen Dwarakanath, Vice President of Hedged. The Nifty 50 broke the consolidation zone on Thursday and is currently testing crucial support levels of around 24,700. If the price falls below this level, it could signal further losses, and the 24,000 level will soon become feasible.
Dr Dwarakanath noted that the daily chart’s RSI is currently in oversold territory. This could signal a temporary stoppage in the downward trend or the possibility of a slight technical rebound. But, any rally may be brief due to the market’s negative sentiment and the ongoing selling by FIIs.
VLA Ambala, Co-Founder of Stock Market Today, highlighted that the recent correction of 6% in the Nifty 50 index could allow buyers to buy stocks that have performed better than previously. However, she cautioned against it by advising traders not to buy the dips now and instead focus on selling at any rally.
Ambala also said that the Nifty 50 is expected to have a support range between 24630 to 24,500, and resistance is expected to be between 24,810-24,900. The market is bearish, and traders are advised to be cautious.
Global Cues and FII Trends
The global markets remain unstable as worries about increasing interest rates and growing geopolitical tensions remain a major factor in investors’ sentiment.
US Treasury yields have been increasing, putting pressure on the stock market worldwide. The constant outflows from FIIs are accelerating the negative sentiments within Indian markets.
In recent times, FIIs have been consistent sellers of Indian equity markets, and net outflows continue to push the markets lower. The weakness of global cues and a rising US currency have increased the negative mood.
Options Data Analysis
The options data for the week’s expiry shows the prevailing bearish mood on the market. The increase in call writing over the 24,800 mark and the short-covering of puts above the 25,000 strikes also indicate an absence of conviction in bullish markets in the market.
Analysts suggest that traders keep an eye on the 24,700 level in case a breach of it could lead to another downward trend in the index.
The ADX DI- line is moving upwards, suggesting that the downward trend may continue in the short term.
Outlook for Bank Nifty
The Bank Nifty is also facing an uncertain future, with key levels of support around 51,000 to 50,800. If the price falls below these levels, it could trigger more declines to 50,200 or 49,700.
The options writers have been selling aggressively calls below 52,000, suggesting a strong resistance to upward movement.
Dr Dwarakanath emphasized that the RSI for Bank Nifty is also showing negative signals. The index may be subject to additional sell-off pressure if it does not maintain key levels of support.
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This content is for informational purposes only and should not be considered as financial or investment advice. Readers are advised to conduct their own research or consult a professional financial advisor before making any investment decisions. SMJ and its affiliates are not responsible for any losses incurred based on the information provided in this article.
