The Indian stock market indices, Sensex and Nifty 50, are expected to open flat on Monday, influenced by mixed global cues.

Gift Nifty Indicates Flat Start

The Gift Nifty trends also suggest a flat opening for the Indian benchmark index. It was trading around the 24,225 level, which is about 10 points higher than the Nifty futures’ previous close.

Friday’s Market Recap

On Friday, there was a broad sell-off in the domestic equity indices. The Nifty 50 ended below the 24,200 mark.

  • Sensex fell by 662.87 points (0.83%) to close at 79,402.29.
  • Nifty 50 dropped 218.60 points (0.9%) to settle at 24,180.80.

The Nifty 50 formed a bearish candle with a long lower wick on the daily chart, showing strong buying towards the closing session.

Analysts’ Views on Nifty 50

Vinay Rajani, Senior Technical & Derivative Research Analyst at HDFC Securities, noted:

  • The Nifty 50 is trading below all important moving averages, indicating a downtrend across all time frames.
  • The RSI oscillator on the daily chart is in the oversold territory, suggesting a possible pullback.
  • If a pullback occurs, Nifty could rise to the 24,600 – 24,650 levels, which is the neckline of a bearish head and shoulders pattern.

He advises using higher levels to reduce long positions due to the bearish primary trend.

Trading Strategy Suggestions

Rajani added:

  • The downtrend is continuing, but oversold oscillators hint at a potential recovery.
  • Traders might consider selling or exiting long positions in the 24,600 – 24,650 range.
  • Falling below 23,900 could lead Nifty towards the next target of 23,000.

Nifty Options Data

Dr. Praveen Dwarakanath, Vice President of Hedged.in, observed:

  • Increased call writing at 24,000 and above.
  • In-the-money puts saw short covering.
  • These factors indicate weakness in the index.

Nifty 50 Predictions

Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth, said:

  • Nifty 50 has been declining for five consecutive sessions.
  • Strong support is expected around the 24,000 level due to maximum put writing.
  • Immediate resistance is at 24,400 and 24,500 because of call writing.
  • Technical indicators are oversold, so a short-covering pullback might take the index to 24,350 or 24,440.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, mentioned:

  • Nifty 50 has reached the 24,000 – 24,050 support zone, aligning with psychological support and the daily lower Bollinger band.
  • A pullback to 24,350 is possible but should be seen as a selling opportunity.
  • The short-term trend remains negative, with 24,000 being a key level.

Advice for Traders

VLA Ambala, Co-Founder of Stock Market Today, recommends:

  • Adopting a “sell on rise” approach to match the current market trend.
  • Noting that Nifty formed a “Bearish Belt Hold” pattern below the 20-week EMA and is trading 4% below the 50-day EMA.
  • Expecting support between 24,150 and 24,000, and resistance between 24,315 and 24,430.
  • Medium-term investors might consider buying on dips near the 50-week EMA.

Bank Nifty Predictions

The Bank Nifty index dropped by 743.70 points (1.44%) on Friday, closing at 50,787.45 and forming a bearish candle.

Dr. Praveen Dwarakanath stated:

  • Bank Nifty broke support at 51,000, suggesting continued weakness.
  • Immediate support is at 50,500, where a bounce occurred at the session’s end.
  • Momentum indicators on daily and weekly charts show ongoing weakness.
  • Any bounce could be an opportunity to sell at higher levels.
  • Immediate resistance is at 52,000.
  • Options data shows call writing above 50,800 and short covering in in-the-money puts, indicating continued weakness.

Aditya Agarwal added:

  • Bank Nifty found buying interest around 50,400 and pulled back.
  • The short-term structure is weak, with strong resistance at 51,000 – 51,200.
  • Breaking below 50,400 could lead the index down to 49,800 or 49,400.

Key Takeaways

  • The overall market trend is bearish, but oversold conditions might lead to short-term pullbacks.
  • Traders are advised to use rallies as selling opportunities.
  • Key support and resistance levels have been identified for both Nifty 50 and Bank Nifty.
  • Investors should stay cautious and consider market volatility when making decisions.