The Indian stock market indices, Sensex and Nifty 50, are anticipated to open lower on Monday due to weakness in global markets. Trends on Gift Nifty suggest a negative start, trading around the 24,380 level, which is nearly 155 points below the Nifty futures’ previous close.
Market Performance Recap
On Friday, the Indian equity market experienced significant selling pressure. The Sensex dropped by 738.81 points, or 0.91%, closing at 80,604.65. Similarly, the Nifty 50 declined by 269.95 points, or 1.09%, ending the day at 24,530.90. This drop created a long bear candle on the daily chart, engulfing the previous day’s bullish candle.
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, this pattern indicates a bearish engulfing pattern, often seen as a top reversal signal after a substantial upward movement. This suggests potential continued weakness in the short term.
Technical Analysis of Nifty 50
On the weekly chart, Nifty 50 formed a small negative candle with a long upper shadow, resembling a shooting star pattern. Confirmation of this pattern could signal a crucial trend reversal. Shetti believes that the short-term trend for Nifty has reversed from its all-time highs, indicating possible further weakness ahead.
Rupak De, Senior Technical Analyst at LKP Securities, notes that the Nifty has formed a bearish engulfing pattern on the daily chart, suggesting a possible bearish reversal. The Relative Strength Index (RSI) shows negative divergence, indicating a shift in price momentum.
The daily RSI has entered a bearish crossover, emerging from the overbought zone. Support levels for Nifty are placed at 24,500, below which the index might drift down to 24,400 – 24,200. On the higher end, resistance is expected between 24,650 – 24,700.
Short-Term and Mid-Term Predictions
For short-term traders or those looking for swing trades, VLA Ambala, Co-Founder of Stock Market Today, recommends a cautious approach. Mid to long-term investors should watch for discounted stocks or wait for a dip in the benchmark index before making new investments.
Ambala notes that Nifty shows a downward shooting star on the weekly chart, indicating potential resistance. She expects the benchmark index to find support between 24,480 and 24,350 and face resistance between 24,625 and 24,700.
Bank Nifty Outlook
Bank Nifty also experienced a decline, falling 355 points or 0.67%, to close at 52,266 on Friday, forming a bearish candlestick pattern on the daily charts. Rupak De advises traders to adopt a sell-on-rise strategy, with resistance at 52,500.
Bullish positions should be considered only if the index closes above 52,500. Further weakness is expected if it closes below its 21-day Exponential Moving Average (EMA) at 52,000.
According to Ambala, Bank Nifty can expect support at 51,950 and 51,650, with resistance levels at 52,470, 52,710, and 52,850 in the next trading session.
The Indian stock market is expected to open lower on Monday, influenced by global market trends and technical indicators. Traders should be cautious and monitor key support and resistance levels for both Nifty 50 and Bank Nifty. It is advisable to consult certified financial experts before making any investment decisions, considering the current market volatility and potential for further weakness.
Disclaimer: The views and recommendations mentioned above are those of individual analysts or brokerage firms. Investors are advised to verify these views with certified financial experts before making any investment decisions.
