Indian equity benchmark indices, Sensex and Nifty 50, appear set for a subdued opening on Wednesday, following a day of consolidation and reflecting mixed signals from global markets.
After a strong multi-day rally, technical indicators and options market data suggest a potential pause or range-bound trading in the near term.
The domestic equity market ended Tuesday’s choppy session largely unchanged, managing to hold onto key psychological levels despite indecisiveness between buyers and sellers.
The Sensex closed with a minor gain of 70.01 points (0.09%) at 80,288.38, while the Nifty 50 finished essentially flat, up just 7.45 points (0.03%) at 24,335.95.
Early cues from Gift Nifty futures on Wednesday morning, trading around the 24,375 level (a discount of roughly 50 points to Nifty futures’ previous close), pointed towards a potentially negative start for the day.
Sensex eyes breakout or correction levels
Technical analysts are closely watching key levels for the Sensex. Shrikant Chouhan, Head Equity Research at Kotak Securities, noted the index is encountering resistance near the 80,500 zone, forming a small bearish candle on Tuesday, which signifies uncertainty.
“We are of the view that, on the upside, 80,500 would be the immediate breakout level for the bulls. Above this level, Sensex could rally towards 80,800 – 81,000,” Chouhan stated.
Conversely, he warned, “if the index falls below 80,000, selling pressure is likely to accelerate. Below this level, we could see a quick correction down to 79,700 – 79,500.”
Nifty consolidates near highs amid caution signals
The Nifty 50 also displayed signs of consolidation after its recent sharp run-up.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, told Live Mint that Tuesday’s action formed “a small red candle… with a minor upper shadow,” indicating a “failed upside breakout attempt” near the 24,350 – 24,400 resistance area.
While suggesting this could lead to further short-term consolidation, Shetti noted the underlying bullish pattern of higher tops and bottoms remains intact on the daily chart.
He places immediate support at 24,150 and sees a decisive move above 24,450 potentially opening targets towards 24,850.
Hrishikesh Yedve at Asit C. Mehta Investment Interrmediates Ltd. informed Mint the formation of a “shooting star” candle on Nifty’s daily chart, also signaling selling pressure near the highs, with 24,460 acting as a hurdle.
He anticipates support near the 200-Day SMA around 24,050, followed by 23,850.
Bajaj Broking Research echoed the consolidation theme, expecting Nifty to trade within a 23,800 – 24,550 range as it works off overbought conditions from the recent rally.
VLA Ambala, Co-Founder of Stock Market Today, noted a “spinning top” pattern near the recent highs and advised neutral options strategies, anticipating a range-bound Nifty (support 23,950-24,100; resistance 24,550-24,630) over the next couple of weeks.
Options data signals rising caution
Analysis of the options market further points towards increasing caution among traders.
Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities, highlighted a significant buildup of call open interest (OI) at the 24,500 strike (1.65 crore contracts), marking it as strong near-term resistance.
Conversely, substantial put writing at the 24,000 strike (1.12 crore contracts) reinforces it as key support.
“The significant build-up of open interest in the 24,400 – 24,500 band further highlights it as a crucial resistance zone,” Dhameja told Live Mint.
He noted that while put writers are shifting lower, intensified call writing signals “an undercurrent of nervousness.”
The Put-Call Ratio (PCR) dropping sharply from 1.17 to 0.84 confirms this tilt towards caution.
Bank Nifty hovers below record highs
The Bank Nifty index also showed signs of pausing after its recent strong move, closing slightly lower by 0.07% at 55,391.25 on Tuesday and forming a small bear candle.
Bajaj Broking Research suggests a sustained move above the recent high of 56,098 is needed to trigger further upside towards 56,800.
Failure to breach this level could see the index consolidate within the 54,000 – 56,000 range, helping ease overbought conditions.
Key support is identified between 53,500 – 54,000. Yedve also noted a “shooting star” candle, suggesting supply near 56,000 and support at 54,450, anticipating consolidation within this range.
As the market navigates this phase, stock-specific action driven by the ongoing Q4 earnings season is expected to remain a key focus for investors.
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