Nifty 50 and Sensex Outlook: Key Levels to Watch as Indian Markets Brace for US Election Results

The Indian stock market’s major indices, Sensex and Nifty 50, are expected to open lower on Wednesday, as investors remain cautious ahead of the US 2024 election results. Early indications from Gift Nifty suggest a weaker start for the Indian markets, with Gift Nifty trading around the 24,215 level—a discount of nearly 80 points from Nifty futures’ previous close.

On Tuesday, the Indian equity market staged a solid recovery and ended the day on a high note. The Nifty 50 index closed above the 24,200 level after a strong rally, while the Sensex gained 694.39 points, or 0.88%, to close at 79,476.63. The Nifty 50 also saw a notable increase, ending 217.95 points, or 0.91%, higher at 24,213.30.

This sharp recovery led Nifty 50 to form a bullish candle pattern, known as a “Piercing line,” on the daily chart. This pattern suggests that bulls may be returning to the market after a day of declines. According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, this pattern is a positive signal, but a sustained move above 24,500 is needed to confirm a bullish reversal in the Nifty 50. Otherwise, the prevailing bearish pattern of lower highs and lows may continue.

Nifty 50 and Bank Nifty: Key Levels and Predictions

Nifty 50 Prediction

The Nifty 50 index is currently on the edge of a potential trend reversal, with immediate support at the 23,800 level and resistance around 24,200. Shetti pointed out that if Nifty 50 manages to decisively move above the 24,500 mark, it could lead to further upward momentum. However, any weakness from current levels could see the Nifty 50 decline towards 23,900 – 23,800 levels.

Nifty 50 Open Interest (OI) Data: In the derivatives market, Nifty’s OI data shows the highest open interest on the call side at the 24,500 and 25,000 strike prices. On the put side, the peak OI is also observed at the 25,000 level. This suggests that Nifty 50 faces strong resistance at the 24,500 mark, but if the index manages to stay above this level, traders may be ready to drive it higher.

Mandar Bhojane, Research Analyst at Choice Broking, explained that this configuration indicates a key resistance point around 24,500. If Nifty can hold above this level, it may experience further gains.

Dr. Praveen Dwarakanath, Vice President of Hedged.in, noted that Nifty 50 has shown a “dead cat bounce” from its support at 23,800 levels, with immediate resistance at 24,500. A close above this level could signal a further rally towards 25,000. While Nifty closed above the Keltner channel on the daily chart, it remains below the lower band on the weekly chart, indicating that this bounce might present a selling opportunity. According to Dwarakanath, the ADX average line has moved above 40, suggesting that a pause or slight bounce could be expected before any major trend change.

Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth, highlighted that technical indicators remain in oversold territory, meaning a short covering could drive the Nifty 50 to 24,450 – 24,540 levels. He sees immediate support around the 24,000 – 23,800 range, which traders may use for buying opportunities.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, pointed out that on the daily charts, Nifty 50 formed a “Piercing line” candlestick pattern, often viewed as bullish. Gedia believes that a break above 24,368 would confirm a trend reversal, with daily momentum indicators showing a positive crossover—a signal to buy. He emphasized, however, that confirmation of a reversal requires a clear break above 24,368.

VLA Ambala, Co-Founder of Stock Market Today, commented on the current RSI of 68, noting that Nifty 50 is trading below its 20-week EMA but above the 20-month EMA. This convergence could indicate an opportune time for a “buy on dips” strategy, while a “sell on rise” approach may benefit long-term traders and investors. Ambala expects Nifty 50 to find support between 24,060 and 23,800, with resistance at 24,350 – 24,500.

Bank Nifty Prediction

The Bank Nifty index jumped 992 points, or 1.94%, on Tuesday, closing at 52,207.25. This movement formed a large green candlestick, suggesting a recovery within a narrow trading range. Bank Nifty has been oscillating between 51,000 and 52,400 levels, with analysts expecting a breakout from this range to drive further price action.

Dr. Praveen Dwarakanath noted that Bank Nifty’s recent trading behavior suggests buyers step in at lower levels, while sellers dominate at higher points. A clear break from this range could lead to a significant price move. Momentum indicators on the weekly chart continue to show weakness, although the ADX average line is beginning to rise from below 15, indicating a developing trend.

Aditya Agarwal observed that Bank Nifty respected its support zone of 50,800, with Tuesday’s rally fueled by short covering. He believes Bank Nifty could head toward 52,500 – 52,800 on the upside, with any dip to 51,740 – 51,400 likely offering fresh buying opportunities for traders.

In summary, while the Indian markets remain cautious in the face of upcoming US election results, Tuesday’s strong rally has positioned Nifty 50 and Bank Nifty at potential breakout levels. The indices may either gain further if key resistance levels are broken or face downside pressure if they fail to maintain upward momentum.