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The Indian stock market is projected to open on a positive note on Monday, August 19, following gains in global markets and upbeat investor sentiment. This positive outlook is supported by the trends on Gift Nifty, which was trading at around 24,670, indicating a premium of approximately 72 points compared to the previous close of Nifty futures.
On Friday, the domestic equity indices closed with a significant rise, almost 2% each. The Nifty 50 reclaimed the 24,500 mark, while the Sensex surged by 1,330.96 points (1.68%) to close at 80,436.84. The Nifty 50 formed a long bull candle on the daily chart with a lower shadow, suggesting a potential upside breakout from consolidation around the 24,400 levels.
Technical analysts believe that the recent downside breakout was a false breakout, leading to a sharp upside bounce on Friday. The next upside targets for the Nifty 50 are expected to be around 24,700 and 25,000 in the near term. Despite the positive outlook, experts recommend a cautious approach.
Rupak De, Senior Technical Analyst at LKP Securities, suggests that Nifty 50 may continue consolidating within the 24,300 - 24,550 range in the near term. A decisive move above 24,550 could trigger a directional up move in the index. He advocates a buy-on-dips strategy unless Nifty falls decisively below 24,300.
VLA Ambala, Co-Founder of Stock Market Today, points out that the Nifty index formed a green candlestick pattern with a long lower shadow, indicating a positive trend. The benchmark index breached its 50-day EMA after eight days of consolidation, closing Friday’s session above it. However, she warns that the Nifty’s RSI readings suggest it is trading in an overvalued territory. In this scenario, traders are advised to be mindful when selecting stocks for short-term trading and focus on stocks consolidating at or below their sector valuations.
Looking ahead, Ambala expects the Nifty to gain support between 24,470 and 24,350 and meet resistance between 24,630 and 24,745 in the upcoming session.
The Bank Nifty index also saw a significant surge on Friday, closing at 50,517, forming a bullish candlestick pattern with a lower shadow on the daily charts. Analysts view this as a positive sign, indicating a double bottom reversal formation. They highlight the 50,000 level as a critical support level for short-term traders. The 20-day SMA, around 50,900, and the 51,200 level are expected to act as crucial resistance areas.
Vaishali Parekh, Vice President - Technical Research, PL Capital – Prabhudas Lilladher, observes that the Bank Nifty witnessed a strong pullback from the 100 period MA level of 49,700, indicating a positive bias. She expects further rise in the index once the resistance barrier of 50,800 is convincingly breached, with potential targets of 52,000 and 53,400 levels in the coming days. The Bank Nifty is projected to trade within the weekly range of 49,500 - 51,800 levels.
Source: Nifty 50, Sensex today: What to expect from Indian stock market in trade on August 19