October 7: Nifty 50 & Sensex Outlook for Indian Stock Market

The Indian stock market is poised for a positive opening today as indications suggest that the Sensex and Nifty 50 will gain ground following a week marked by significant losses. The upward trend in global equity markets is providing a much-needed boost to market sentiments.

Trends from the Gift Nifty, which was trading at around 25,250, suggest that Indian benchmarks will benefit from a premium of approximately 60 points over the previous close of Nifty futures, setting a hopeful tone for the start of the week.

Last week was turbulent for domestic equity benchmarks, with the Sensex and Nifty 50 experiencing consecutive losses over five trading days. On Friday, the Sensex plunged by 808.65 points, or approximately 0.98%, closing at 81,688.45, while the Nifty 50 fell by 235.50 points, or 0.93%, to settle at 25,014.60.

Nifty 50’s structure revealed a bearish candle formation on the daily chart, characterized by a long upper shadow. Expert analysis suggests that this pattern indicates a tendency to ‘sell on rise’ in the market environment.

Nagaraj Shetti, a Senior Technical Research Analyst at HDFC Securities, noted that the long upper shadows appearing over the past three sessions signal potential reversal patterns, positing Nifty 50 at a critical support level of around 25,000. Despite this, a minor upside bounce may be anticipated at the beginning of the week, yet traders should remain cautious, viewing it primarily as a selling opportunity.

Shetti further emphasizes that should Nifty 50 trade decisively below the 25,000 – 24,950 range, the index could face additional fallout, possibly dipping towards the 24,500 level in the near term.

Open Interest (OI) data indicates strong support for Nifty around the 24,500 level on the put side. On the call side, major concentrations of OI are forming at the 25,400 and 25,500 levels, likely establishing resistance points as market dynamics evolve.

Technical Research Analyst Mandar Bhojane advises traders to practice caution, maintain strict stop-loss orders, and avoid holding long positions overnight, a strategy tailored to navigate the ongoing volatility in the market.

On October 4, Nifty 50 continued its descent, demonstrating significant fluctuations. The sentiment remains notably negative, with traders often selling at higher levels. Support is observed at 24,750, while resistance appears at 25,300.

VLA Ambala, Co-Founder of Stock Market Today, highlighted a nearly 5% drop in Nifty 50 over the last week, noting an overwhelmingly bearish outlook. Current prices suggest the index is trading in the overbought territory, as reflected by its RSI remaining above 80 on a monthly timeframe.

Ambala anticipates continued downward pressure, recommending a ‘sell on rise’ strategy until Nifty 50 encounters substantial support between 24,000 and 23,800. The index has formed respective bearish candlestick patterns on both weekly and daily charts, signaling potential further declines.

Bank Nifty finished the previous session down by 383.15 points, or 0.74%, at 51,462.05, reflecting a bearish candlestick pattern. Intraday performance saw the index initially breach the 52,000 mark before a last-hour sell-off forced it below 51,500.

Technical analyst Aditya Agarwal opined that the immediate support for Bank Nifty is seen at 51,300, while a bounce is likely, though perhaps short-lived given the current momentum indicators are in the oversold region.

Current trading patterns suggest that the Bank Nifty index may retreat towards 51,000 – 50,840 levels, while resistance is projected around 52,000 – 52,150.

In summary, as market conditions continue to evolve, investors should proceed with caution. Profit-booking activities might rise in the face of global uncertainties exacerbating local market dynamics. Moving forward, robust analysis and meticulous trading strategies will be crucial for navigating this fluctuating environment.