Nifty Prediction for Tomorrow: Bearish Undertone Continues?
The Indian stock market witnessed a sharp decline today, with the Nifty 50 opening gap down and remaining under pressure throughout the session. The index closed near the day’s low, registering a loss of 1.06%. While the Nifty Midcap 100 showed some resilience, it also ended the day in the red, down by 0.94%.
Key Market Insights:
Sectoral Performance:
- Top Performers: Auto, FMCG
- Lagging Sectors: IT, Metals
Despite selling pressure across sectors, defensive plays like FMCG and Auto managed to hold their ground. On the other hand, IT and Metals bore the brunt of heavy selling, dragging the indices further down.
Options Market Analysis:
- Open Interest: A significant build-up was observed at the 23,000 Call and 22,500 Put, indicating a strong resistance and support zone, respectively.
- Sentiment: Higher call writing compared to put writing suggests a bearish undertone for the upcoming session.
- VWAP Trading Range: 22,430 to 22,730, which could act as a reference point for traders.
- Max Pain: The 22,700 level, indicating that options writers might aim to keep expiry around this level.
- Put-Call Ratio (PCR): At 0.614, signaling increased call writing and a bearish bias.
Institutional Activity:
- Foreign Institutional Investors (FIIs): Net sellers of ₹6,286.7 crore
- Domestic Institutional Investors (DIIs): Net buyers of ₹5,185.65 crore
The heavy FII selling indicates continued weakness in the broader market, while DII buying provided some cushion. However, it was not enough to reverse the bearish sentiment.
Index Futures Data:
Nifty Futures: -6,569 contracts
Bank Nifty Futures: -2,892 contracts
FINNIFTY Futures: -87 contracts
Midcap Nifty Futures: +1,654 contracts
Nifty Next 50 Futures: -105 contracts
The aggressive short positions in Nifty and Bank Nifty futures further confirm the cautious stance among traders.
Tomorrow’s Market Prediction:
Given today’s market dynamics, the following factors will play a crucial role in tomorrow’s market movement:
Bearish Indicators:
- Weak Global Cues: If international markets remain under pressure, Nifty could face further selling pressure.
- FII Outflows: Continued selling by FIIs might keep the index under pressure.
- Resistance at 22,700-22,730 Zone: With heavy call writing at 23,000, the upside appears capped.
Bullish Possibilities:
- DII Buying Support: If DIIs continue their buying spree, it could limit downside risks.
- Key Support at 22,500: If this level holds, a short-covering bounce is possible.
- Oversold Conditions: A technical rebound cannot be ruled out if markets enter extreme oversold territory.
Trading Strategy for Tomorrow:
- Intraday Traders: Consider selling on rallies near 22,700 with a stop loss above 22,750.
- Positional Traders: Watch for support near 22,500 for potential accumulation.
- Options Traders: Straddle or strangle strategies around the 22,500-22,700 range could be effective.
Final Thoughts:
While the short-term trend remains bearish, traders should closely monitor support levels and institutional activity. A breach below 22,500 could accelerate selling, while a move above 22,730 might trigger short-covering rallies. Staying cautious with proper risk management will be key in navigating the market volatility.
Stay tuned for more updates and happy trading!