The Indian stock market is poised for a cautious start on Wednesday, with benchmark indices Sensex and Nifty 50 expected to open flat. This outlook follows subdued cues from global markets, although positive sentiment from the recently announced India-US trade deal is likely to provide underlying support to domestic equities.
Market Trends and Global Influences
The Gift Nifty, a key indicator for the Indian market, was trading around the 25,819 level, reflecting a marginal premium of nearly 2 points from the Nifty futures' previous close. This suggests a tepid opening for the benchmark index. On Tuesday, the market witnessed a robust rally fueled by the India-US trade deal announcement, with the Nifty 50 closing above the 25,700 mark.
In a significant surge, the Sensex jumped 2,072.67 points, or 2.54%, to settle at 83,739.13. Similarly, the Nifty 50 gained 639.15 points, or 2.55%, ending the session at 25,727.55. This strong performance underscores the market's positive reaction to the trade developments.
Sensex Prediction and Technical Analysis
Shrikant Chouhan, Head of Equity Research at Kotak Securities, provided insights into the Sensex's trajectory. He noted that while the index opened with a substantial gap of over 3,500 points, it experienced some profit booking at higher levels due to temporary overbought conditions.
"We maintain a positive short-term outlook for the market, but traders should consider a strategy of buying on dips and selling on rallies. Key support levels for the Sensex are identified at 83,000 and 82,500, with immediate resistance placed at 84,300 and 84,500. A breach below 82,500 could potentially weaken the uptrend," Chouhan explained.
Nifty 50 Analysis and Derivative Data
Derivatives data reveals significant activity, with heavy put writing observed at the 25,500 strike and strong call writing at the 26,000 strike. This pattern indicates the formation of a near-term trading range for the Nifty 50.
Hitesh Tailor, Research Analyst at Choice Equity Broking, advised traders to adopt a buy-on-dips approach near crucial support levels. He emphasized waiting for a decisive breakout above resistance before initiating fresh directional positions.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, highlighted that the Nifty 50 formed a large red candle on the daily chart but managed to close above the 38.2% Fibonacci retracement level around 25,500. "The index closed higher, leaving an unfilled gap between 25,108 and 25,641 levels. This 533-point gap represents a significant bullish breakout following a period of sharp correction. According to gap theory, if this opening gap remains unfilled over the next few sessions, it could be classified as a bullish breakaway gap, typically occurring during a sustained uptrend," Shetti elaborated.
He further noted that the underlying market trend remains positive. As long as the Nifty 50 stays above 25,600, there is a high probability of it advancing towards resistance levels at 26,000 and 26,300 in the near term, with immediate support at 25,600.
Additional Technical Perspectives on Nifty 50
Nilesh Jain, Head of Technical and Derivatives Research at Centrum Broking Ltd., pointed out that the Nifty 50 reclaimed its long-term 200-day moving average (DMA) at 25,250 and the 100-DMA at 25,630. The index successfully negated a bearish setup and sustained above the 25,600 mark.
"On the momentum front, the MACD indicator has generated a fresh buy crossover, while the RSI has rebounded from the oversold zone, moving above 50 to signal improving strength. Additionally, the India VIX cooled off sharply by 6%, closing near 13. Any further decline in volatility would provide additional comfort to bullish sentiments. Overall, the structure for the Nifty 50 appears positive, targeting 26,100 levels. A buy-on-dips strategy remains advisable as long as the index holds above 25,250," Jain stated.
Bank Nifty Prediction and Market Dynamics
The Bank Nifty index ended Tuesday's session 1,422.30 points, or 2.43%, higher at 60,041.30, forming a bearish candle on the daily chart.
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, identified the 59,600–59,500 zone as a key support area for the Bank Nifty index. "On the upside, the region between 60,300 and 60,400 serves as immediate resistance. A breakout above this band could revive upward momentum," Shah commented.
Om Mehra, Technical Research Analyst at SAMCO Securities, observed that the daily chart displays a large candle with a long upper shadow, indicating selling pressure near record levels following the sharp opening move. "The Bank Nifty index managed to close above all key moving averages. The RSI is positioned near 56, reflecting a recovery from recent weakness. The DMI setup shows the positive directional line above the negative line, accompanied by an increase in trend strength. For the Nifty Bank, 59,600 remains the immediate support level, followed by 59,400. A move below this zone could reintroduce short-term pressure," Mehra explained.
He added that resistance is placed near 60,437, marking the earlier 52-week high, followed by 60,500. Currently, the Nifty Bank index is positioned near record levels after a sharp gap-up move, but resistance levels are expected to guide the next directional move.
Disclaimer: The views and recommendations expressed above are those of individual analysts or broking companies and do not represent the stance of Mint. Investors are advised to consult certified experts before making any investment decisions.
