The Indian equity market is poised for a cautious opening on Tuesday, with Gift Nifty trends indicating a muted start for benchmark indices despite positive signals from global markets. This comes after a disappointing previous session where both major indices closed in negative territory.
Market Performance and Technical Outlook
In Monday's trading session, the Sensex dropped 331.21 points, or 0.39%, to settle at 84,900.71, while the Nifty 50 declined by 108.65 points, or 0.42%, closing at 25,959.50. The benchmark Nifty index slipped below the crucial 26,000 level, marking a significant psychological threshold for traders.
According to Chandan Taparia, Head of Derivatives & Technicals at Motilal Oswal Financial Services Ltd, the options data reveals interesting patterns. Maximum Call Open Interest is positioned at 26,100 followed by 26,200 strike, while maximum Put Open Interest sits at 26,000 then 25,900 strike.
"Call writing is observed at 26,100 then 26,200 strike while Put writing is seen at 26,000 then 25,950 strike," Taparia noted. "The option data suggests a broader trading range between 25,500 to 26,400 zones, with an immediate range between 25,700 to 26,200 levels."
Nifty 50 and Bank Nifty Analysis
The Nifty 50 index formed a bearish candle on the daily chart and has been establishing lower lows over the past three sessions, indicating a temporary cooling-off phase within the broader upward trend. Nifty 50 must cross and hold above 26,000 zones to initiate an upward movement toward 26,100 and then 26,250 levels. Failure to maintain this level could lead to weakness toward 25,850 and subsequently 25,750 levels.
The Bank Nifty index presents a mixed picture, closing marginally lower by 32.35 points, or 0.05%, at 58,835.35 on Monday. The index formed a small bearish candle on the daily scale with a long upper shadow, indicating selling pressure at higher levels while multiple supports remain intact at lower zones. Bank Nifty needs to hold above 58,750 zones for an upward move toward 59,000 and then 59,350 levels. A break below this support could trigger weakness toward 58,650 and then 58,500 levels.
Expert Stock Recommendations
Chandan Taparia has provided specific trading recommendations for three stocks in today's session:
Tech Mahindra | Buy | Target Price: ₹1,580 | Stop Loss: ₹1,450
Tech Mahindra shares have broken out from a double bottom pattern with significantly increased trading volumes on the daily scale. The stock has surpassed its 100-day exponential moving average zones, and the rising RSI indicator confirms the reversal of the downtrend.
L&T Finance | Buy | Target Price: ₹310 | Stop Loss: ₹285
L&T Finance shares maintain an overall upward trend, consistently respecting its 20-day exponential moving average support zones. The stock has shown resilience with minor dips being actively bought, and the rising ADX line confirms the strength of the current uptrend.
Bajaj Finance | Sell | Target Price: ₹950 | Stop Loss: ₹1,030
Bajaj Finance shares have formed a bearish "Inverted Pole & Flag" pattern, suggesting the continuation of the existing downtrend. The declining MACD indicator further confirms the negative momentum building in the stock. Taparia specifically recommends selling Bajaj Finance 30th December Futures.
Investors should note that these recommendations represent the views of individual analysts and should consult certified experts before making any investment decisions. The market continues to navigate through global cues and domestic technical factors, requiring careful monitoring of key support and resistance levels.
