Indian stock market indices, Sensex and Nifty 50, are expected to open on a cautious note on Tuesday, reflecting weak sentiment from global markets.
Trends in Gift Nifty suggest a muted start for the Indian benchmark index, trading around the 24,810 level—a premium of approximately 20 points compared to Nifty futures’ previous close.
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Previous Session
In the previous trading session, domestic indices experienced a dip as profit booking set in, reversing gains from the prior week. The Sensex closed down by 73.48 points to settle at 81,151.27, while the Nifty 50 lost 72.95 points, or 0.29%, to close at 24,781.10.
The Nifty 50 formed a small candle with a minor lower shadow on the daily chart, reflecting indecisiveness in the market. Analysts believe this pattern indicates a lack of strength for any sustained upside in the near term.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, mentioned that the market continues to hover within a broader high-low range.
Resistance is evident at 25,200–25,100 levels, while support is noted between 24,600 and 24,500. This range-bound movement highlights the ongoing struggle between bulls and bears, contributing to market volatility.
Nifty OI Data and Analysis
Open Interest data for Nifty indicates crucial resistance at the 24,900 and 25,000 strike prices on the call side. This concentration of OI suggests that crossing these levels will prove difficult unless there is a significant catalyst.
On the put side, support is being built at the 24,700 and 24,500 levels. According to Hardik Matalia, Derivative Analyst at Choice Broking, these levels will be key to watch for traders aiming to establish positions.
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, further emphasizes that Nifty 50 is facing selling pressure around the 25,000 mark.
This is closely linked to the high OI concentration in calls at this level. He also noted that the 20-week moving average at 24,730—which had been defended well last week—was tested again on Monday.
With bulls and bears locking horns, traders should expect heightened volatility within the range of 24,500 to 25,200 in the near term.
Nifty 50 Technical Outlook
The technical indicators are offering mixed signals. On the weekly chart, the Nifty 50 is finding support at its 20 EMA, indicating a potential dead cat bounce.
Dr. Praveen Dwarakanath, Vice President at Hedged.in, explained that although the index didn’t sustain the day’s high, Nifty managed to surpass the previous day’s high, indicating buying interest.
The momentum indicators, currently in the oversold region, also point to a potential bounce. The ADX DI- line has turned downward, while the ADX DI+ line is trending up, signaling a possible shift towards an upward move in the coming sessions.
The trend remains bearish in the short term. VLA Ambala, Co-Founder of Stock Market Today, pointed out that the Nifty 50 closed within the 24,781 range on Monday, forming a “Head and Shoulders” pattern on the daily chart.
This, coupled with an intraday “Bearish Belt Hold” candlestick pattern, suggests further downside pressure. In the near term, support is expected around 24,640 and 24,400, while resistance may be encountered near 24,780 and 24,900.
Bank Nifty Outlook
Bank Nifty also struggled in Monday’s session, closing 131.50 points lower at 51,962.70. The index formed a bearish candlestick pattern on the daily chart, signaling potential downside.
Dr. Dwarakanath explained that Bank Nifty faced rejection from its 20 EMA, indicating that further decline is possible.
While the Stochastics indicator is overbought, the ADX DI- line is sloping downward and the ADX DI+ line is trending upward, which could hint at a bounce from current levels. Additionally, the RSI in the oversold region supports this outlook.
Despite these signs of a potential short-term bounce, Jatin Gedia noted that Bank Nifty’s inability to sustain at higher levels reflects a lack of strength in the market.
Gedia expects the index to undergo further consolidation before any meaningful upside can be achieved. Immediate resistance is anticipated around 52,250–52,300, while key support lies at 51,100–51,000.
Trading Strategy
For those looking to trade Bank Nifty, increased options writing in calls for the weekly expiry suggests that the index is likely to remain below the 52,000 mark in the short term.
Traders should keep an eye on the 51,100–51,000 support zone, as a break below this range could accelerate the downside. For the upside, clearing the 52,250–52,300 hurdle will be crucial to resume the bullish momentum.
Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi, recommends a cautious approach with a focus on key levels. He suggests using a bull call spread strategy for those looking to capitalize on potential upward movement.
This strategy involves buying the 52,800 strike call option and selling the 53,300 strike call, aiming to benefit if Bank Nifty remains above 52,000 during the week. This setup offers a favorable risk-reward ratio with a breakeven point above 52,800.
Key Levels to Watch
- Nifty 50: Resistance at 24,900 and 25,000; support at 24,640 and 24,500
- Bank Nifty: Resistance at 52,250–52,300; support at 51,100–51,000
Also Read: Market Outlook and Trade Setup for October 21: Nifty and Bank Nifty
