Indian stock market benchmark indices, Sensex and Nifty 50, are likely to open lower on Tuesday tracking weak global market cues.
The trends on Gift Nifty also indicate a tepid start for the Indian benchmark index. The Gift Nifty was trading around 24,856 level, a discount of nearly 70 points from the Nifty futures’ previous close.
On Monday, the domestic equity market ended flat after Nifty 50 hit a record high near 25,000 level.
The Sensex rose 23.12 points, or 0.03%, to close at 81,355.84, while the Nifty 50 settled up 1.25 point, or 0.01%, at 24,836.10.
Nifty 50 formed a small negative candle on the daily chart with minor upper and lower shadow.
“Technically, this formation is signaling a high wave or bearish counterattack type candle pattern (not a classical one). This market action is indicating chances of more consolidations in the short term. The positive chart pattern like higher tops and bottoms is intact on the daily chart and the Nifty is currently in the process of forming a new higher top of the pattern. Though, placed at the new highs, still there is no confirmation of any higher top reversal pattern building at the highs," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He believes the near-term uptrend status of Nifty remains intact and the market could probably show some more choppy movement or minor dip in the next 1-2 sessions before surging higher in the near term.
Here’s what to expect from Nifty 50 and Bank Nifty today:
Analysing the Nifty Open Interest (OI) data, Mandar Bhojane, Research Analyst at Choice Broking noted that the highest OI on the call side was observed at the 24,200 and 25,500 strike prices, while on the put side, it was at the 24,500 strike price.
Nifty 50 index shifted into minor profit booking from the new highs on July 29 and closed the day on a flat note after hitting a new all-time high at 24,999.
“The current price movement may seem insignificant for the benchmark, but the overall tone indicates a positive trend, with the bulls decisively leading in the advance-decline ratio. Additionally, the mid and small-cap stocks exhibit strong performance, outperforming the major indices and contributing to robust market sentiment. For the Nifty 50, the intermediate support is seen around 24600, followed by sacrosanct demand around the 24,500 zone in the comparable period," said Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One Ltd.
According to him, on the higher end, 25,000 is very much in the vicinity now, and a decisive breakthrough could lead the next leg of the rally toward the 161.8% retracement of the previous week’s swing at 25,340 on an intermediate basis.
Meanwhile, given the high market valuation, VLA Ambala, Co-Founder of Stock Market Today suggests adopting a cautious approach to cushion risks.
“However, the valuation of some companies and stocks remains attractive, generating the interest of many investors and traders. In the next few days, sectors like Media, Pharma, Banks, Auto, and Metals are expected to be in focus. After looking at these market aspects, Nifty could expect support near 24,780 and 24,700 and face resistance around 24,950 and 25,080 in the next market session," Ambala said.
Bank Nifty index witnessed a sharp correction of about 900 points from the day’s high and ended Monday’s session around 110 points higher at 51,406.
“The 61.8% retracement level of the recent correction acted as a resistance during the upmove in the Nifty Bank index in Tuesday’s session. The RSI readings hint at a weak momentum in the banking space and hence, there could be a relative underperformance in this index," said said Ruchit Jain, Lead Research, 5paisa.com.
He advises traders to stay cautious in this space for the short term and wait for a move above the retracement resistance to confirm a continuation of the uptrend.
According to Jain, Bank Nifty support is placed at 50,950 and 50,600 levels, while the index may face resistance at 51,700 and 52,100 levels.
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