Indian equity markets, represented by benchmark indices Sensex and Nifty 50, are set to open flat on Tuesday, October 29, influenced by global market cues.
Indications from the Gift Nifty suggest a flat-to-positive start, with the index trading around the 24,360 mark—a premium of about 10 points over the previous close of Nifty futures.
On Monday, the market showcased a strong recovery after a week of declines. The Sensex surged by 602.75 points, or 0.76%, closing at 80,005.04, while the Nifty 50 advanced by 158.35 points, or 0.65%, to settle at 24,339.15.
This rally marked a potential shift in momentum, as the Nifty 50 formed a “high wave” candlestick pattern, suggesting the beginning of an upward correction after recent market dips.
Nifty’s Technical Setup
A deeper dive into Nifty’s daily chart reveals a “spinning bottom” pattern, signaling investor indecision. Technical indicators, however, highlight potential strong support around the 24,100 and 24,000 levels as the market nears monthly expiry amidst a festive trading week.
Resistance is expected at 24,600, marked by the 89-day Exponential Moving Average (DEMA), while the confluence of the 50 DEMA and 20 DEMA around 24,800 represents a key upper boundary.
According to Rajesh Bhosale, Equity Technical Analyst at Angel One, “The current levels suggest a trading range between 24,100 and 24,600. For the truncated week, results season and stock-specific themes will continue to drive momentum.”
Open Interest data further supports this trading range. Maximum call OI is concentrated at the 25,000 and 24,500 strikes, while maximum put OI lies at the 24,000 and 23,500 strikes.
Call writing is evident at the 24,800 and 24,500 levels, with put writing seen at the 24,000 and 24,300 strikes.
The OI data implies a broader range between 24,000 and 24,800, with an immediate band of 24,100 to 24,600, as observed by Chandan Taparia, Head of Equity Derivatives and Technicals at MOFSL.
Market Sentiment and Nifty Projections
Nifty 50 snapped its five-day losing streak with Monday’s 158-point recovery, which some analysts view as a “dead cat bounce.” Dr. Praveen Dwarakanath, Vice President at Hedged.in, cautions against over-optimism, remarking, “Nifty’s dead cat bounce from the 24,100 support level faces immediate resistance at 24,500.
Closing above this could propel Nifty to 24,800, yet this bounce might present an opportunity to lighten positions, with a target support at 23,700.”
In line with Dwarakanath’s observations, OI data from options writers indicates resistance at the 24,500 level, as increased call writing has taken place above this level, signaling a cautious stance by traders.
Aditya Agarwal, Head of Derivatives and Technical Analysis at Sanctum Wealth, expects a potential short-covering rally as expiry approaches.
He suggests that technical indicators are still in the oversold territory, increasing the likelihood of short covering pushing Nifty towards the 24,500-24,640 zone.
He maintains a cautious outlook, advising traders to reduce long exposure in such moves, given the medium-term downtrend. Agarwal sees immediate support around the 24,070 and 23,920 levels for the index.
Market Strategy and Key Levels to Watch
In the lead-up to monthly expiry, VLA Ambala, Co-Founder of Stock Market Today, recommends a “sell on rise” approach for short-term traders.
She suggests, “For Nifty, traders should target closing between 24,850 and 24,530. The RSI stands at 33 (daily), 51 (weekly), and 69 (monthly), indicating varied momentum across timeframes. A further dip could provide attractive entry points for investors looking at long-term positions.”
Ambala also points to possible support levels between 24,210 and 24,000, while resistance is anticipated between 24,455 and 24,650. Her stance emphasizes selective buying opportunities, particularly for long-term positions, as Nifty trends towards its monthly expiration date.
Bank Nifty Performance and Analysis
Bank Nifty, which gained 471.85 points or 0.93% on Monday to close at 51,259.30, also indicates mixed sentiments.
The index formed a bullish candlestick on the daily chart, hinting at recovery potential; however, profit-taking ensued as Bank Nifty failed to hold above 51,500.
Agarwal noted that Bank Nifty would continue to find solid support near 51,000 and 50,800. A breach above 51,500 could initiate further short covering, potentially lifting the index to 51,840 or even 52,200.
He advises traders to capitalize on rallies, given the persistent short-term weakness indicated by technical indicators.
Dr. Dwarakanath of Hedged.in shared a similar perspective on Bank Nifty’s cautious outlook. He suggests, “Monday’s bounce offers an opportunity to sell with an immediate target of 50,500.” Additionally, he points to the OI data, which indicates resistance at 52,000 levels with notable call writing above this threshold.
Global Market
On the global front, US markets posted mixed results, with the Nasdaq closing higher on Friday, buoyed by gains in megacap stocks, while the Dow Jones and S&P 500 saw marginal declines.
This variance in performance signals a cautious market ahead of major corporate earnings announcements this week.
The geopolitical situation in the Middle East also weighs on sentiment, with crude oil prices dipping despite heightened tensions following recent Israeli actions.
In Asia, Japan’s Nikkei saw a 1.6% rise despite the yen hitting a three-month low following election outcomes that weakened the ruling Liberal Democratic Party’s majority.
This currency movement, alongside a 4.2% decline in Brent crude prices, may influence trade sentiment in Indian markets, particularly for the energy-dependent sector.
