Positive signals from the global market suggest that the key equity indexes of the Indian stock market, the Sensex and Nifty 50, would probably open higher on Monday.
The Indian benchmark index is out to a strong start, according to Gift Nifty's trends. The Gift Nifty was trading at a premium of around 110 points over the previous closing of the Nifty futures, at 22,685 points.
The benchmark market indexes saw profit booking across all sectors on Friday, which caused them to close about 1% down. The Nifty 50 closed 172.35 points, or 0.76%, down at 22,475.85, while the Sensex fell 732.96 points, or 0.98%, to conclude at 73,878.15.
On the daily chart, the Nifty 50 created a lengthy bear candle that absorbed the modest range candle from the previous three sessions.
In technical terms, this pattern resembles a bearish engulfing pattern, indicating further weakening in the near future. At the new highs, Nifty on the weekly chart created a candle pattern resembling a tombstone doji.Such a doji pattern often signals a negative reversal following a respectable rising rally. Bulls should thus exercise caution when prices are high, according to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
He thinks the Nifty's short-term trend appears to have turned south.
At the swing high of 22,794 levels on Friday, the bullish pattern's higher top is probably over, and the short-term downward correction is anticipated in the upcoming sessions. The levels of 22,600 provide immediate resistance, and 22,120 is the next downward target to be aware of, according to Shetti.
Nifty 50 Forecast
The Nifty 50 index saw a significant drop from its all-time highs on May 3 and finished the day 172 points down.
"The Nifty index is forming a double top pattern on the daily chart along with a bearish engulfing candle, indicating indicators of near-term bearishness. This shows that the market should adopt a sell-on-rise strategy. Following up on sales in the next week would be necessary to confirm the double top pattern. The 22,600–22,700 zone, where aggressive call writing has been seen in the options market, is where immediate resistance is noticed, according to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.
Shah thinks that the index has immediate support at 22,300 on the downside, and a breach below this level might quicken the downward momentum.
Bank Nifty Forecast
On Friday, the Bank Nifty index closed at 48,924 after falling 308 points, creating a bearish candlestick pattern on the daily charts.
Despite selling pressure from higher levels, the Bank Nifty index continued its upward momentum, closing close to the 49,000 immediate support level. A break over the immediate resistance level of 49,200 might lead to short-covering advances up to levels of 49,500, according to Shah.
On the other hand, he said, there is immediate support between 48,800 and 48,700, and a breach there might result in more downside towards the 20 DMA, which is located around 48,400.
