- The Indian stock market indices, Sensex and Nifty 50, are likely to extend losses and open lower on Wednesday amid weak global cues.
- The trends on Gift Nifty also indicate a negative start for the Indian benchmark index. The Gift Nifty was trading around 22,830 level, a discount of nearly 90 points from the Nifty futures’ previous close.
- “On the daily chart, Nifty remains in a firm uptrend. Tuesday’s negative closing seems to be more of a breather after the recent sharp up-move. Nifty continues to hold above the 20 and 50-day SMA. 14-day RSI at 64.53 is rising and not overbought (though it has eased in the last two sessions), which is encouraging,” said Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities.
Indian stock market indices, Sensex and Nifty 50, are expected to open lower amid weak global cues. Read on for detailed insights and predictions.
Market Trends and Predictions
On Tuesday, the Indian stock market benchmark equity indices ended lower, extending the losing streak for the third consecutive session. The Sensex declined 220.05 points to close at 75,170.45, while the Nifty 50 settled 44.30 points, or 0.19%, lower at 22,888.15. Nifty 50 formed a bearish candlestick pattern on the daily charts, with a lower top lower bottom formation.
Technical Analysis and Expert Opinions
According to Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities, “On the daily chart, Nifty remains in a firm uptrend. Tuesday’s negative closing seems to be more of a breather after the recent sharp up-move. Nifty continues to hold above the 20 and 50-day SMA. 14-day RSI at 64.53 is rising and not overbought (though it has eased in the last two sessions), which is encouraging.” While he expects further upsides and new life highs in the coming sessions in the run-up to the election results, he remains open to volatile movements in the very near term.
Nifty OI Data
Analysis of Open Interest (OI) data reveals that the call side exhibited the highest OI at the 23,000 strike price, followed by 23,500 strike prices, whereas on the put side, the highest OI was observed at the 22,500 strike price, noted Mandar Bhojane, Research Analyst at Choice Broking. Rahul Ghose, CEO of Hedged.in, notes that the bearish OI build-up in 23,000 Calls further indicates that 23,000 shall be a hurdle for Nifty to cross in the last expiry week of the May series.
Nifty 50 Prediction
The Nifty 50 index witnessed a volatile session on May 28 to end near day’s low with a minor loss of 44 points at 22,888 levels. “The index remained within a range as the lack of a breakout on either side failed to provide any directional movement. Significant Call writing was observed at the 23,000 strike price, followed by the 23,100 and 22,900 strikes. In comparison to the heavy Call writing, Put writers were less active, leading to a decline in the PCR. The high India VIX suggests that market volatility might remain elevated,” said Rupak De, Senior Technical Analyst, LKP Securities.
On the higher end, he expects the 22,950 – 23,000 zone might act as a strong resistance, and any rise may attract selling pressure. On the lower end, the Nifty might drift down towards 22,800 / 22,600, he added.
Investment Strategies
“Factoring in the Indian market’s overbought conditions, a slight correction could appear, presenting an opportunity for investors. Both long-term and mid-term investors may consider booking profits on high-valued stocks but short-term traders can benefit from avoiding high-priced segments,” said V.L.A. Ambala, Co-founder – Stock Market Today (SMT). According to Ambala, Nifty could gain support between 22,830 and 22,760 and face resistance between 22,910 and 22,960.
Bank Nifty Prediction
The Bank Nifty ended 140 points lower at 49,142 on Tuesday amid profit booking. “The Bank Nifty index found strong resistance at 49,500 – 49,600 due to visible selling pressure, while 49,000 serves as a robust support level. The momentum indicator RSI at 61 and the index maintaining above its 14-day EMA indicate a bullish undertone. A buy-on-dips strategy is recommended, with a stop-loss set at 48,700,” De said. On the higher end, he believes 49,500 – 49,600 might continue to remain a strong resistance.
According to Ghose, Bank Nifty also traded below the CPR signifies bearishness likely to continue for today as well, however today being the May monthly expiry for Bank Nifty, it shall remain volatile. “The increased OI build-up in the calls at 49,200 and above strikes, dropping PCR from 0.98 to 0.81 and the shifting down of the max pain at 49,200 further indicates the downward pressure shall be observed in today’s session as well,” Ghose said.
Conclusion
In summary, the Indian stock market is poised for a cautious start amid weak global cues. Both Nifty 50 and Bank Nifty are expected to face resistance at higher levels, with potential support zones identified. Investors are advised to remain vigilant and consider booking profits on high-valued stocks while short-term traders should navigate the market volatility carefully. As always, consulting with certified financial experts before making any investment decisions is recommended.
