The Indian stock market is likely to see a significant dip at the start of trading on Monday. Both benchmark indices, the Sensex and the Nifty 50, are expected to open lower, following a broad sell-off in global markets.
Global and Domestic Market Trends
The early indications from the Gift Nifty suggest a negative opening for the Indian market. The Gift Nifty was trading around the 24,365 level, reflecting a discount of approximately 335 points compared to the previous close of the Nifty futures. This trend highlights a bearish sentiment in the Indian stock market.
On the previous trading day, the Indian equity indices experienced a decline, with both Sensex and Nifty 50 falling over 1%. The Sensex dropped by 885.60 points, or 1.08%, closing at 80,981.95. Similarly, the Nifty 50 ended 293.20 points, or 1.17% lower, at 24,717.70. This drop was primarily driven by profit booking.
The Nifty 50 formed a negative candle on its daily chart on Friday, suggesting a possible short-term top reversal. According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, this market action indicates a potential bearish trend. He pointed out that the gap created by the market opening downwards remains unfilled, which is often a sign of a bearish reversal pattern.
Shetti anticipates that the Nifty 50 might experience further weakness in the near term, potentially falling to levels between 24,600 and 24,500 before any potential rebound.
Outlook for Nifty 50
The Nifty 50 index showed sharp declines amidst global market weakness. Rupak De, Senior Technical Analyst at LKP Securities, noted that the index has faced downward pressure after forming a spinning top pattern on the daily chart. The Relative Strength Index (RSI) has also moved downward, indicating a bearish crossover.
De expects that the Nifty might further decline towards levels around 24,530 or 24,400. Despite this, VLA Ambala, Co-Founder of Stock Market Today, suggests that the market remains in an overall bullish trend. While the weekly and monthly RSI values remain high, indicating an overbought condition, the daily RSI has cooled off. Ambala recommends monitoring the market closely, as any dip could present buying opportunities.
Support levels for the Nifty are seen around 24,520 and 24,440, with resistance expected at 24,780 and 24,860 if the market opens flat or with a slight gap.
Outlook for Bank Nifty
The Bank Nifty index also faced a decline, ending 213.85 points, or 0.41% lower, at 51,350.15 on Friday. Despite this drop, the Bank Nifty formed a bullish candlestick pattern with an upper shadow on its daily charts. This indicates some potential for a rebound despite the recent underperformance compared to the Nifty index.
Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher Pvt. Ltd., highlighted that the Bank Nifty has struggled near the 51,800 resistance level and has maintained the 50-EMA (Exponential Moving Average) level of 51,000 as crucial support. The Bank Nifty is expected to trade within a weekly range of 50,400 to 52,500.
Monday’s trading session is likely to start with lower indices for both the Sensex and Nifty 50 due to ongoing global market pressures. Investors should watch for potential support and resistance levels to gauge market movement. With technical indicators pointing to a bearish trend, it may be wise for traders to be cautious and consider potential dips as buying opportunities.
