The Indian stock market is expected to open lower on Wednesday, following weak global cues and in anticipation of the interest rate decision by the US Federal Reserve. The trends in the Gift Nifty also indicate a gap-down start for the Indian benchmark index, with the Gift Nifty trading around 20,080, lower than the Nifty futures’ Monday close at 20,170.
On Monday, both the Sensex and Nifty closed lower as concerns about global economic growth persisted ahead of key central bank meetings.The Sensex ended the day down 241.79 points at 67,596.84, while the Nifty closed 59.05 points lower at 20,133.30. The Nifty formed a small negative candle on the daily chart with minor upper and lower shadows.
According to Nagaraj Shetti, Technical Research Analyst at HDFC Securities, the current chart pattern indicates a “Bearish Tri-Star” type candle pattern, which is a three-candle top reversal pattern, although not a classical one. Further weakness from this point could confirm a short-term top reversal for the Nifty at 20,222 levels. Shetti believes that the short-term trend of the Nifty is on the verge of reversing to the downside. A decisive move below the immediate support of the 10-day EMA (exponential moving average) at 19,940 levels could confirm further weakness for the near term, but sharp selling momentum is unlikely.
The Nifty has been consolidating within a broad range, with significant call writing activity observed at higher levels, indicating cautious market participants.
This sideways trend is expected to continue due to the anticipation of the US Federal Reserve meeting’s outcome, which can have a significant impact on global financial markets. According to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, the Nifty has support at the 20,100 level and resistance at 20,200. A breakout on either side of this range could lead to trending moves and influence market direction.
In the banking sector, the Bank Nifty witnessed profit booking at higher levels and ended 252 points lower at 45,980 on Monday, failing to surpass the 46,300 level. However, the PSU bank sector outperformed in the index, and this outperformance is expected to continue in the near term. According to Shah, the Bank Nifty has an immediate support zone in the range of 45,800 to 45,700, which is crucial. A breach below this level could trigger further selling pressure. Despite the profit booking, the overall sentiment for the Bank Nifty remains bullish, as long as the mentioned support levels are held on a closing basis, indicating confidence in the upward trajectory of the index.
