The Indian stock market is gearing up for what seems to be a cautiously optimistic Tuesday, with the Sensex and Nifty 50 indices expected to witness a muted opening. This anticipation is fueled by mixed global market cues that are keeping investors on their toes.
Adding to the pre-market speculation is the Gift Nifty, indicating a mildly positive start for the Indian benchmark index. As of the latest data, the Gift Nifty was trading around 21,861 levels, a slight increase from the Nifty futures’ previous close at 21,830.
On the previous trading day, the domestic benchmark indices reached new highs but experienced profit booking at elevated levels, resulting in a flat closure with a positive bias. The Sensex gained 31.68 points to close at 72,271.9, while the Nifty 50 closed 10.50 points, or 0.05%, higher at 21,741.90.
Nifty 50’s daily chart reflects a small body of positive candles with upper and lower shadows. Technically, this pattern suggests a high wave type candle formation, indicating high market volatility at its highs.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, highlighted the positive chart pattern of higher tops and bottoms on the daily chart, signalling an ongoing uptrend. However, he also noted the emergence of high volatility around these new highs, suggesting the possibility of another downward correction.
Shetti emphasised the importance of a decisive move above 21,850 levels, which could nullify the bearish effect and potentially open up more upside in the near term.
Looking ahead, Deven Mehata, Equity Research Analyst at Choice Broking, provided insights into the Nifty 50’s open interest data. On the call side, the highest open interest (OI) is observed at 22,000, followed by 21,800 strike prices. On the put side, the highest OI is at the 21,700 strike price.
Analysing the Nifty 50 predictions, Rupak De, Senior Technical Analyst at LKP Securities, noted the index’s volatility on January 1. De sees a possible directional fall in the market if it decisively falls below 21,650. On the positive side, a close above 21,750 might propel the index towards higher levels.
Shifting focus to Bank Nifty, which fell by 58 points to end at 48,234 on January 1, De highlighted its fall below the 20-day moving average (20DMA) on the hourly chart. This suggests weakening bullish sentiment, with immediate support at 48,000, a level where put writers are heavily present. A decisive fall below 48,000 might lead the index towards 47,700/47,500. On the upside, 48,300 stands as a significant resistance level, and bullish momentum may resume only above this mark.
In conclusion, while the market expects a muted opening, investors are advised to keep a close eye on crucial levels, particularly 21,850 for Nifty, and 48,300 for Bank Nifty, as these could dictate the near-term direction of the Indian stock market.
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