Market Overview
The Indian stock market is expected to have a flat opening on Tuesday, as investors exhibit caution following mixed signals from global markets. This uncertainty comes in the wake of hawkish remarks made by US Federal Reserve Chairman Jerome Powell, which has heightened investor concerns about monetary policy and economic outlook.
Global Influences
As per the trends observed in the Gift Nifty, the Indian benchmark indices, including the Nifty 50, are projected to start on a neutral note. The Gift Nifty was recorded at around the 26,000 mark, trading at a premium of nearly 10 points compared to the previous close of Nifty futures.
Recent Performance
In the previous trading session on Monday, domestic equity indices witnessed a decline of over one percent, with the Nifty 50 dropping below the significant 26,000 mark. The Sensex fell by 1,272.07 points, equating to a 1.49% drop, closing at 84,299.78. The Nifty 50, in a similar trend, settled at 25,810.85, down by 368.10 points, or 1.41%.
Technical Analysis
The recent trading pattern of Nifty 50 has formed a long bearish candlestick on the daily chart, indicating a potential bearish reversal. Senior Technical Research Analyst Nagaraj Shetti from HDFC Securities noted that this setup suggests further weakness may be anticipated in the following sessions, although the overall bullish trend of higher tops and bottoms remains intact as per the daily chart.
Market Predictions
According to Shetti, Nifty 50 is projected to find support between the 25,500 and 25,400 levels, with a possible rebound from these lows. Open interest (OI) data indicates a strong buildup around the 26,000 and 26,200 strike prices for calls, while the put side shows significant interest at 25,500, suggesting robust support around the 25,600 level for the Nifty.
Further Insights
Rupak De, a Senior Technical Analyst with LKP Securities, emphasized that the Nifty 50’s steep decline on September 30—breaking below the newly established lower support of 26,000—was coupled with a negative divergence in the RSI, indicating potential continued weakness. Immediate support is noted around 25,750; a breach below this level could trigger further declines.
Critical Levels to Watch
Dr. Praveen Dwarakanath highlighted that if the index dips below 25,800, we could see a further slide towards 25,500 and even 24,800 levels. The options market is revealing increased call writing, hinting at a bearish sentiment within the index as we approach the week’s expiry.
Bank Nifty Analysis
On a related note, the Bank Nifty index faced a significant drop of 856.20 points, or 1.59%, closing at 52,978.10 on Monday. Analysts observed that Bank Nifty was notably weaker than Nifty, influenced by potential negative divergences.
Support and Resistance Levels
The immediate support for Bank Nifty stands at the 52,800 level, a threshold that is at risk of being breached. Data from options writers indicated increased call writing at levels above 53,000, underscoring the prevailing bearish outlook for the index.
Conclusion
In summary, the Indian stock market is entering a crucial period of adjustments with analysts pointing towards potential support levels while remaining alert to further weaknesses, particularly for indices like Nifty 50 and Bank Nifty. Investors are advised to keep a close watch on trading patterns and broader market signals.
Disclaimer: The views and recommendations provided herein are based on individual analysts and firms, and not representative of any broader market perspectives. It is advisable for investors to consult with certified financial experts prior to making any investment choices.
