The movement of GIFT Nifty also indicates that India’s benchmark index has got off to a negative start. GIFT Nifty is trading around 22,660 levels, down about 70 points from the previous close of Nifty futures.
Domestic equity indices fell for the fourth consecutive session on Wednesday, with the benchmark Nifty 50 trading above the 22,700 level.
The Sensex index fell 667.55 points or 0.89 percent to close at 74,502.90, while the Nifty 50 index fell 183.45 points or 0.8 percent to close at 22,704.70.
Nifty 50 has formed a bearish candlestick pattern with an upper wick on the daily chart.
Read also: Indian Stock Market: 6 Key Things That Changed the Market Overnight – GIFT Nifty, US Stocks, Government Bond Yields Rise
“On the daily chart, the uptrend is weakening. Wednesday’s negative close has seen Nifty close below the previous high of 22,795. Still, Nifty is trading above the 20-day and 50-day SMAs. The 14-day RSI is trending downwards at 56.57 and is now below the 9-day EMA, which indicates weakening momentum,” said Subhash Gangadharan, senior technical and derivatives analyst at HDFC Securities.
He believes further declines are likely if the immediate support at 22,685 is breached. The immediate resistance is currently at 22,826. The market is likely to be volatile in the coming sessions as the announcement of the election results draws closer, he added.
Nifty 50 Prediction
The Nifty 50 index fell 183 points to close at 22,704 on May 29 as the bears held the upper hand and it fell sharply.
“During the day, there was active call selling at strike prices of 23,000 and 22,800 while put selling was active at strike prices of 22,800 and 22,700. Options data suggests that Nifty is likely to expire around 22,800. Meanwhile, a drop below 22,700 could trigger further selling pressure in the market,” said Rupak De, senior technical analyst at LKP Securities.
The immediate resistance, he said, is at 22,800.
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VLA Ambala, co-founder, Stock Market Today (SMT), pointed out that Nifty 50 is trading around 11% away from the index’s 20-day EMA on the monthly time frame, indicating price divergence bridging over time.
“However, if this bullish trend continues, the expected correction may be less. Conversely, if the index dips below 22,380, selling pressure may increase in the market. To weather the situation, it is advised to adopt a wait-and-see strategy. Selling F&O strangles, debt spreads and futures with covered calls could also help in making the most of this corrective move,” Ambala said.
Long-term investors may find buying opportunities if the index hits the support levels, but she advises proceeding with caution.Judging by this, in the next trading session, the Nifty index may find support around 22,570-22,450 levels and face resistance around 22,700-22,750 levels, Ambala added.
Read also: Stock Market Today: Four stocks on F&O Prohibited List on May 30
Bank Nifty Forecast
Bank Nifty fell 641 points to end at 48,501 on Wednesday and formed a bearish candlestick pattern on the daily chart.
“Bank Nifty index opened below the support level of 49,000 and traded below it, indicating a clear change in sentiment. It closed near the 21-day EMA of 48,400. If Bank Nifty fails to sustain above the 21-day EMA, further selling pressure may see it fall towards 48,000,” De said.
As a result, he now believes that 48,400 will act as the support level for Bank Nifty and 49,000 will act as the new resistance level.
Disclaimer: The views and recommendations expressed above are those of the individual analysts or brokerage firms and not that of Mint. We recommend checking with a certified professional before making any investment decisions.
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Published date: May 30, 2024, 7:27 AM
