Indian benchmark indices, Sensex and Nifty 50 would likely open flat-to-lower on Monday as mixed cues emanate from the global markets.
According to Gift Nifty patterns, the birthday index of the country is also hinting at a lukewarm beginning for the benchmark index. The Gift Nifty was trading at around 24,925 level, which has seen a discount of almost 25 points compared to the close of the previous day's settlement of Nifty futures.
The equity market indices had ended the day higher on Friday, breaking their three-day losing streak.
The Sensex rose 218.14 points and closed at 81,224.75. In contrast, the Nifty 50 settled 104.20 points, or 0.42%, higher at 24,854.05.
Nifty 50 in the weekly time frame forms a 'high wave' candlestick pattern and 'Marubozu' in the daily timeframe at the 20 EMA.
The Nifty 50 tested the 20-week EMA with a correction of 6.5% after hitting a record high in September in Friday's session. Short-term investors should be wary, but medium- and long-term investors should buy quality stocks, when they seem undervalued today, said VLA Ambala, the co-founder of Stock Market Today.
Meanwhile, with a correction of 6.5%, Nifty's monthly RSI fell from 82 to 73 and on the daily timeframe is sitting at 42. This is a clear indication that only a 'buy on dip' strategy be adapted for swing trading or intraday trading, Ambala said.
what to look forward to from Nifty 50 and Bank Nifty today:
Nifty OI Data
Interestingly, options data place significant open interest at the 25,500 level on the put side, which means the level has a significant scope for support. Concentrations of notable OI are seen at the levels of 25,000 and 25,500 on the call side. The advice for traders and investors going ahead will be to look out for buying opportunities in dips of Nifty with appropriate stop-loss strategies placed below support levels, says Mandar Bhojane, Technical Analyst at Choice Broking.
Nifty 50 Prediction
The Nifty 50 on Oct 18 rallied 104.20 points, or 0.42%, to close at 24,854.05, forming a positive candle on the daily chart with a minor lower shadow.
"Nifty 50, on its daily chart, has created a positive divergence. Nifty 50 also bounced from its critical support of 24,700 levels as expected. From the fall, momentum indicators show signs of recovery with today's rally. The concern technically remains with the ADX DI- line yet to trend down for the index to move upside," said Dr Praveen Dwarakanath, Vice President of Hedged.in.
He further told, "Options writer's data for this month's expiry showed that there is increased call writing at 24,800 and above levels, and increased volume in call writing compared to puts. It indicates the weakness in the index.".
Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth said, "In the short term, Nifty 50 remains in the oversold zone and will continue to see short covering from current levels.".
"Upside remains limited and a move towards 24,950 - 25,050 levels will be used by traders to book profit in trading long positions. On the lower side, 24,700 - 24,650 will be immediate support for the index," said Agarwal.
Bank Nifty Prediction
Bank Nifty index closed 805.40 points, or 1.57%, higher at 52,094.20 on Friday, forming a bullish candlestick pattern on the daily charts.
Bank Nifty bounced from its support at 51,000 levels. The daily chart shows the RSI line crossing over the RSI average line and a drop in the ADX DI- line, which suggests the index to continue upside to its resistance at 52,500 levels. The daily candle has formed a bullish engulfing candle with a break of immediate resistance at 52,000 levels, indicating upside momentum to continue," says Dwarakanath.
According to him, data in options writer's has shown short covering in the calls of monthly expiry that could also be the reason for Friday's rally in the index. Increase in put writing is also an indicator of upside in the index from these levels.
Agarwal said on Friday, the Bank Nifty index had a sharp pullback from those levels and closed above 52,000 levels, respecting the crucial support zone of 51,000.
Short-term view on Bank Nifty is positive and, on the higher side, it can move towards 52,480 / 52,760 levels in the short term. Any dip in Bank Nifty towards 51,620 / 51,440 can be used as a fresh entry point from the targets mentioned above. Only a close below 50,800 will negate bullish views on the index," Agarwal said.
Disclaimer: All recommendations given above are based on individual analysts/ broking companies' views and not ICFM's. We recommend investors to consult certified experts before investing.
