As the Indian stock market braces for the trading session on Tuesday, analysts predict that both the Sensex and Nifty 50 indices are set to open lower. This anticipated drop comes amid a backdrop of weakness in global markets, which has contributed to investor caution.
The trends observed in the Gift Nifty further underscore this negative outlook. Currently trading around the 24,885 mark, the Gift Nifty shows a discount of nearly 100 points when compared to the previous close of Nifty futures, indicating a potentially challenging day ahead for the Indian benchmark index.
On Monday, India’s equity market faced another tough day, marking a decline for the sixth consecutive session. The Sensex plummeted by 638.45 points, or 0.78%, closing at 81,050.00, while the Nifty 50 fell by 218.85 points, or 0.87%, to end at 24,795.75.
The sustained downward momentum is evident, with Nifty 50 forming a long bear candle on its daily chart. This pattern suggests that the steep decline may continue, reflecting ongoing negativity in market sentiment.
Market Analysis and Predictions
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the positive chart formations that previously indicated higher tops and bottoms have been overshadowed. The Nifty 50’s breach below the critical support level of 24,753 on Monday signals that any potential upward movements could be temporary, possibly forming a new lower peak as market bearishness prevails.
Shetti predicts the Nifty 50 may trend downward towards the next support levels of 24,500 and 24,400 in the immediate future, reinforcing the notion of a bearish outlook in the market.
Despite the current oversold conditions of the index, short-term corrections may lead to pullbacks towards the levels of 25,200 to 25,350, as suggested by Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth. However, this temporary relief may also create opportunities for traders to initiate fresh short positions as the undertone remains bearish.
Additionally, a closing value below 24,700 could further exacerbate negative sentiment, opening the door for declines toward 24,450 and 24,249 in subsequent sessions.
Volatility and Investor Strategies
Market co-founder VLA Ambala recommends employing a ‘sell on rise’ strategy amid heightened volatility, which has surged by 70% over the past week. This indicates the need for caution, particularly for inexperienced investors. Effective risk management strategies, such as hedging portfolios, may help navigate these fluctuations.
Investors can expect Nifty 50 to find support within the range of 24,630 to 24,470 while facing resistance between 24,930 and 25,040, according to Ambala’s analysis.
Furthermore, Dr. Praveen Dwarakanath, Vice President of Hedged.in, pointed out that Nifty 50 is currently at a crucial support level of 24,800. While significant oversold readings suggest the potential for a brief rally, a weekly close beneath this level could lead the index down further toward 24,000.
Bank Nifty Outlook
The Bank Nifty index likewise suffered significant losses, ending 983.15 points, or 1.91% lower, at 50,478.90 on Monday. The formation of a sizeable negative candle on the daily chart indicates persistent weakness. Breaking below the crucial support of 51,300 further amplifies concerns, with the index now eyeing the next support level at 49,500, which is approximately 1,000 points below the latest closing value.
Aditya Agarwal mentions that immediate support for Bank Nifty is expected around the 50,100 and 49,750 levels, which might prompt a short-term rebound. However, the upper resistive levels of 51,260 and 51,840 will likely be areas where renewed selling pressure could manifest.
