Indian market benchmarking indices-Sensex and Nifty 50-may witness a weak opening on Friday as the global markets will continue with mixed cues and FII outflows have remained in an upward trajectory.
The Gift Nifty suggests that the benchmark index in India is likely to gap down since it is trading at the level of 24,750, while it is a good 90 points discount from the close of Nifty futures in the last session.
The domestic equity benchmarks closed in red on Thursday with Nifty 50 breaking below the 24,800 mark.
The Sensex slid 494.75 points to 0.61 percent and closed at 81,006.61. Nifty 50 settled 221.45 points or 0.89 percent at 24,749.85.
Nifty 50 formed a long bearish candle on the daily chart, which is giving signals that the market is approaching a sharp downtrend breakout of sideways range movement.
"This is negative signal. After the series of positive chart pattern such as higher highs and lows till last month on the daily chart, recent minor upside bounce with range bound action can be considered as a new lower top around 25,200 levels. Hence, a decisive move below the support of 24,700 is likely to form a new lower bottom in the near term, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
Also the near-term trend of Nifty 50 remains weak and further slip from the current levels below 24,700 may throw open the next downside levels of 24,500- 24,400 by next week he said.
Here's what to expect from Nifty 50 and Bank Nifty today:
Nifty OI Data
Open interest at the strike price level- The Nifty OI reflects a significant open interest at the 24,900 and 25,000 strike prices on the call side and at the strikes of 24,700 and 24,500 on the put side. These will be the key levels to take support from, says Hardik Matalia, Derivative Analyst at Choice Broking.
Nifty 50 Prediction
Nifty 50 slipped into sharp weakness on October 17 and closed the day lower by 221 points on the back of selling pressure from FIIs.
"Weekly expiry further added to the pressure on the markets that dragged the index below the 24,800 levels and finally the index closed below that. Short term structure for the index looks weak and sell on rallies strategy can be used by traders.". The higher side of Nifty 50 will face sharp resistance around 24,950 - 25,050 levels; it will use those levels as a guide to reduce the long position. A close below 24,700 will again trigger selling, which can push the index further down to the 24,440 / 24,180 levels, said Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth.
It was a reassuring week from the point of view of technical hints for the future. According to Dr. Praveen Dwarakanath, Vice President Hedged.in, "the consolidation range on Nifty 50 broke and it closed very near its critical support at 24,700 levels".
"A close below the 24,700 can open room for the 24,000 level. Though the ADX DI-line is sloping upside, the ADX average line is sloping down and the RSI on the daily chart is in the Oversold region indicating a halt to the fall or a small dead cat bounce of the index from its current support at 24,700 levels," observed Dwarakanath.
He said options writer's data for this month expiry showed increased call writing above 24,800 levels and short covering of 25,000 puts, indicating weaknesses in the index.
VLA Ambala, co-founder of Stock Market Today feels that the 6% correction seen in Nifty 50 over the last three weeks may have potential dip buying opportunities for previous outperformers. As a market sentiment, she says investors are cautious in the near term and FPI trends need to be followed closely for getting refined strategies.
On the daily price chart, "Nifty formed a bearish 'Head and Shoulders' candlestick pattern. With these factors in mind, positional traders should avoid buying the dips for some weeks and focus more on the 'sell on the rise' strategy. In the subsequent session, Nifty can find support between 24,630 and 24,500 and expect resistance between 24,810 and 24,900," Ambala said.
Bank Nifty Prediction.
The Bank Nifty index skidded 512.25 points or 0.99% and thus closed at 51,288.80 on Thursday, forming a bearish candlestick pattern on the daily charts.
While for Nifty, the selling pressure was not enough to keep it below its 50 DMA. On the lower side, Nifty will face some strong resistance around 14,500 / 14,350 and any pullback towards those levels can be used to initiate fresh short positions for short covering. Aggressive call writing is seen around 14,800 strike option and that will act as resistance for the index from a short term perspective," said Aditya Agarwal.
According to Dr. Praveen Dwarakanath, "the line of RSI was moving down with a cross of the average line of RSI, suggesting that momentum on the downside was to continue.".
The ADX DI- line is sloping upside, indicating further fall from the present levels. The immediate support for the index is at 51,000, which break it can come down to the levels of 50,200 and then 49,700. "There has been increased writing in calls at 52,000 levels and above, which suggests weakness to continue in the index," said Dwarakanath.
Disclaimer: The views of individual analysts or the broking companies mentioned herein are not that of ICFM. All investors are requested to verify with certified authorities before making investment decisions.
