India's benchmark indices, Sensex and Nifty 50, are expected to open on a tepid note on Wednesday amid mixed cues emanating from global markets.
The trends on Gift Nifty also showed that the Indian benchmark index might open in a subdued manner. The Gift Nifty was trading around the 24,550 level, a premium of nearly 10 points from the Nifty futures' previous close.
Domestic equity indices suffered a major selloff on Tuesday, with each closing sharply in the red by over a percent.
Sensex tumbled 930.55 points or 1.15% to close at 80,220.72, while Nifty 50 settled 309.00 points, or 1.25%, lower at 24,472.10.
Nifty 50 formed a long bear candle on the daily chart, which indicates an attempt of decisive downside breakout of 24,600 - 24,500 levels.
Nifty 50 is weakening after forming a new lower top around 25,230 levels. It has been forming a series of higher tops and bottoms on the daily chart for the last few months. This happens to be a negative indication that also states ongoing downward correction. Another important weekly cluster support around 24,500 (ascending trend line, 23.6% retracement and weekly 20 period EMA) is placed at the verge of downside breakout," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
Currently, the short-term trend of Nifty 50 is remaining negative. A decisive move below the 24,500-25,450 levels may open the next downside target towards 24,000. Any movement up to immediate resistance at 24,700 could remain a selling opportunity too, he said.
what to expect from Nifty 50 and Bank Nifty today:
Nifty OI Data
The highest OI on the call side was noted at the 24,600 and 24,700 strike prices, which would translate to strong resistance levels, while on the put side, OI was concentrated at the 24,400 and 24,300 strike prices, and hence, it indicates key support levels, observed Hardik Matalia, Derivative Analyst at Choice Broking.
According to Hedged.in's Vice President, Dr. Praveen Dwarakanath, data of the options writer this month's expiry came in with increased call writing at 24,500 and above levels and short covering in ITM puts, which indicates continuation of downside momentum.
Nifty 50 Forecast
Nifty 50 went weak on October 22 and closed the day lower by 309 points, below the 24,500 level.
Overall, the market's short-term structure has weakened, and on the lower side, the index can gradually move towards 24,200/23,940 levels. On the higher side, 24,700/24,840 will act as a stiff resistance zone for the index, and moving towards those levels can be used to reduce long exposure and increase short positions," said Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth.
Technical Research Analyst at Sharekhan by BNP Paribas, Jatin Gedia said, "On the daily charts, Nifty 59 has slipped decisively below the 20-week average of 24,718 which is a sign of weakness.".
"Daily and hourly momentum indicators have a negative crossover: a sell signal. Hence, both the price and the momentum indicators show weakness. Though we could see a drift towards 24,000 on the downside where we have a high concentration of open interest on the put side, implying support, the upper end for resistance from a short-term perspective would be 24,900-25,000," said Gedia.
VLA Ambala, Co-Founder of Stock Market Today said she has a bearish view for the next few days and advised traders to approach a 'sell on rise' strategy.
The Nifty 50 has corrected nearly 7% and selling pressure could remain. However, Nifty which is in the overbought zone with an RSI of 70 could fall to 60-55 in the coming weeks. As of date, the RSI of Nifty shows 33 on daily and 53 on weekly timeframe forming a Bearish Marubozu candlestick pattern. Amidst these, Nifty could expect support near 24,320 and 24,000 and resistance near 24,510 and 24,585," Ambala said.
Bank Nifty Prediction
Bank Nifty index declined 705.55 points, or 1.36%, to close at 51,257.15 on Tuesday and formed a long bearish candle on the daily chart.
According to Aditya Agarwal, on the lower side, Bank Nifty's immediate support will come around 51,000 / 50,800 levels, and from there, it can see a pullback. But on the higher side, 52,000 / 52,250 levels are going to be a very strong supply zone for the index, and from those levels, profit booking can be expected.
Meanwhile, Bank Nifty index came crashing from the opening price of the day on Tuesday and failed to bounce back during the day; such an index weakness is one of the negative signs. "On the weekly chart, momentum indicators suggest a downside as well.". On the weekly chart, the ADX average line is well below 20 levels with the ADX DI- line on top of the ADX DI+ line, if the ADX average line slopes up, an indication of further downside is likely possible. Options writer's data showed increased writing in calls above 51,500 levels in the monthly expiry, indicating strong resistance at the 51,500 level before the expiry," said Dwarakanath.
Disclaimer: The views and recommendations above are of individual analysts or broking companies and not ICFM. We request investors to contact the certified experts before arriving at any decisions on investments.
