The benchmark indices of the Indian stock market, the Sensex and the Nifty 50, are likely to open lower on Monday, tracking weak signals from the global market.
Trends on the GIFT Nifty also suggest a weak start for the Indian benchmark index. The GIFT Nifty was trading around the 24,735 level, a discount of about 50 points from the previous close of Nifty futures.
On Friday, domestic equity market indices closed marginally lower after the Reserve Bank of India (RBI) announced its monetary policy.
The Sensex closed 56.74 points lower at 81,709.12, while the Nifty 50 fell 30.60 points or 0.12% to 24,677.80.
The Nifty 50 has formed a small red candle with small upper and lower shadows on the daily chart.
"Technically, this market action suggests a breather after a sharp upside recovery from the previous session's low. Such consolidation during an uptrend movement in the underlying is considered a bearish opportunity," said Nagaraj Shetty, senior technical research analyst at HDFC Securities.
Also read: Indian stock market: 10 key things that changed for the market over the weekend
The Nifty 50 has formed a long bullish candle with a small upper shadow on the weekly time frame chart.
"The weekly candlestick pattern suggests a sharp upside breakout which confirms a significant trend reversal on the upside." Shetty "Weekly barriers such as the 10 and 20 period EMAs (exponential moving averages) have crossed the levels around 24,380 / 24,350 levels respectively," Shetty said.
According to him, the near-term trend of Nifty 50 remains positive and there is a possibility of more upside in the coming week as it has moved above the crucial barrier of 24,400 - 24,500 as per the short and long-term charts.
"Further consolidation or minor weakness early next week could be a buying opportunity. Upward targets for the next two weeks are seen around the 25,000 - 25,200 levels. Immediate support is at 24,525," Shetty added.
Here's what to expect from Nifty 50 and Bank Nifty today:
Nifty 50 Forecast
The Nifty 50 shifted into a breathing pattern with a slight bearish bias on December 6 and closed down 30 points.
“Nifty 50 continues to sustain above the breakout from the inverted head-and-shoulders pattern, indicating underlying market strength. In such situations, adopting a buy-on-dips strategy seems prudent, especially with the possibility of a move towards 25,500 in the short term. However, a minor pullback is possible following the sharp rally, further emphasizing the effectiveness of buying on dips to capitalize on this trend,” said Rupak De, Senior Technical Analyst, LKP Securities.
Also Read: Buy or Sell: Vaishali Parekh recommends three stocks for today - December 9
VLA Ambala, co-founder of Stock Market Today, noted that during Friday’s session, the market witnessed a major technical pattern. Nifty 50 formed a long-legged Doji candlestick above the 50-day EMA, which is likely to lead to bullish momentum with an RSI of 60.
“I advise investors to focus on small and mid-cap stocks that are well positioned to benefit from the index’s growth prospects. Amid these developments, the Nifty may find support near 24,630 and 24,520 and resistance between 24,740 and 24,850 in the upcoming trading session,” Ambala said.
Also Read Stock Market Today: Five stocks to buy or sell on Monday - December 9
Bank Nifty Prediction
The Bank Nifty index closed down 94.05 points, or 0.18%, at 53,509.50 on Friday, forming a small bearish candlestick pattern on the daily chart.
"Bank Nifty has gained strength during the week, crossed the tough resistance barrier of 52,600 zone, and with the bias becoming stronger, it is close to the previous peak zone of 54,500 level which can be retested in the coming sessions. The index will remain important. The support of 50-EMA zone of 51,900 level needs to be sustained for some time," said Vaishali Parekh, Vice President - Technical Research, PL Capital - Prabhudas Lilladhar.
According to him, the weekly range of Bank Nifty will be 52,000 - 55,200 level.
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The Sensex closed 56.74 points lower at 81,709.12, while the Nifty 50 fell 30.60 points or 0.12% to 24,677.80.
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