The Indian stock market is expected to see a lackluster opening on Friday, influenced by the mixed sentiments prevailing in global markets. Key indices, Sensex and Nifty 50, are reflecting cautious investor behavior amid fluctuating international trends.
Signals from the Gift Nifty indicate a subdued start for the Indian markets, trading around the 25,090 mark—a dip of nearly 30 points compared to the last closing of Nifty futures. This presents a challenging backdrop for investors as they prepare for today’s trading session.
On the previous day, the domestic equity markets concluded with slight gains, buoyed by robust global cues. The Sensex climbed by 144.31 points to close at 81,611.41, while the Nifty 50 edged up 16.50 points, or 0.07%, finishing the day at 24,998.45.
Market Analysis
Nifty 50’s daily chart revealed a small negative candle complete with a slight upper shadow, indicating the possibility of resistance at current levels. Technical analysis suggests a range-bound phase between 25,150 and 24,950, with recent market formations indicating emerging weaknesses approaching these resistance levels.
Nagaraj Shetti, Senior Technical Research Analyst from HDFC Securities, noted that the formation of long upper shadows suggests that buyers are losing momentum near these hurdles. The double bottom formation around the 24,700 mark remains uncertain due to insufficient follow-through in upside movements.
If the Nifty manages to sustain its position above the resistance levels of 25,250 to 25,300 in the next few sessions, there is potential for a new rally that could drive the index towards the next resistance zone of 25,500 to 25,600.
Nifty 50’s Expected Performance
As we look at the Nifty 50’s recent trend, it has entered a consolidation phase characterized by narrow range movements. The index’s inability to reclaim the 50-day EMA for the past two trading days is troubling, suggesting underlying weakness.
Support levels are identified at 24,950 to 24,900, with further declines below these points signifying the potential for broader correction targets towards 24,750 and 24,700. Conversely, breaking through the resistance level of 25,150 may open doors to advance the index towards the 25,350 to 25,400 range, according to Rupak De, Senior Technical Analyst at LKP Securities.
Bank Nifty Outlook
The Bank Nifty index outperformed its Nifty counterpart on Thursday, closing at 51,530.90, up by 523.90 points or 1.03%. However, similar indecisiveness was noted with the formation of an insider candle.
Momentum indicators suggest that there may be a rebound from currently oversold conditions, however, weaknesses persist, particularly as the ADX lines reflect a lack of strength in the rebound. The immediate resistance around the 51,700 level was not breached during Thursday’s trading, indicating continued caution.
Given current market dynamics, options data depicts mixed signals, revealing some short covering at the 51,500 call levels while witnessing increased put writing above this level, suggesting a potential bounce back to resistance levels.
Strategic Approach
In light of prevailing market conditions, analysts recommend a neutral strategy for the upcoming weeks until market volatility subsides. With Nifty settling at 24,998.45, having formed a small red Doji candlestick pattern, it indicates uncertainty among traders.
Current readings of the Nifty RSI stand at 42 on a daily timeframe, which hints at caution in the near term. Investors might consider implementing a sell-on-rise strategy to navigate potential market fluctuations wisely.
It is prudent for investors to remain vigilant and adapt their strategies based on ongoing technical cues and broader market sentiment, keeping in mind support levels at 24,930, 24,800, and 24,650 and resistance zones between 25,080 and 25,240.
With the market landscape constantly evolving, it is imperative for traders and investors to stay informed and make decisions grounded in comprehensive technical analyses and market trends.
