Following weak cues from global markets, the Indian stock market indices, Sensex and Nifty 50, are expected to open cautiously on Thursday.
The trends on the Gift Nifty also point to a flat-to-positive start for the Indian benchmark index. The Gift Nifty was trading around 21,620, compared to the Nifty futures’ previous close of 21,595.
The benchmark indices ended lower for the second consecutive session on January 3 as investors chose to take profits in high-valued stocks.
The Sensex fell 535.88 points to close at 71,356.60, while the Nifty 50 fell 148.45 points, or 0.69%, to 21,517.35.
On the daily chart, the Nifty 50 formed a long negative candle, putting it on the verge of breaking below the 10-Day EMA, which has been providing support for the Nifty 50 for the past two months. This is not a promising sign.
“On the daily chart, the positive chart pattern of higher tops and bottoms is intact, and current weakness could be in line with the formation of a new higher bottom of the sequence.” “At the moment, there is no confirmation of any higher bottom reversal pattern,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He believes the Nifty 50’s short-term trend remains negative, and a decisive move below 21,500 levels could open the door to the next downside of 21,255 (20-day EMA) and 20,980 levels in the near term.
Today’s Nifty 50 and Bank Nifty movements are as follows:
Predictions for the Nifty 50
The Nifty 50 index fell below the support level of 21,650, causing it to fall towards 21,500.
The prevailing sentiment appears to be weak, as evidenced by the index closing below the critical support level of 21,650. If it continues to fall below 21,500 in the coming days, it could exacerbate the negative sentiment, particularly with expectations of significant unwinding by put writers below 21,500, said Rupak De, Senior Technical Analyst at LKP Securities.
He added that the broader market outlook suggests a sell-on-rise strategy as long as it remains below 21,650.
Bank Nifty Forecast
On Wednesday, the Bank Nifty closed 57 points lower than the previous day’s low, at 47,705.
“On the day of the weekly expiry, the Bank Nifty experienced significant volatility, maintaining a bearish trend as long as it remains below the key level of 48,000.” The index, on the other hand, managed to stay above its 20-day moving average (20DMA) support level of 47,688. “It is critical that the index maintains this level, as a decisive break below it could exacerbate market selling pressure,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.
Shah advises traders to keep a close eye on the movements between 48,000 and 47,688 for potential trend changes and trading opportunities.
