Indian Markets Brace for Crucial Day: Will Bulls Maintain Momentum on July 17?

Indian stock market enthusiasts are on alert as benchmark indices, the Sensex and Nifty 50, are poised for a flat-to-positive opening this Thursday. This comes amidst a backdrop of mixed global market signals, setting the stage for what could be a pivotal trading session.

Early indicators from Gift Nifty, currently trading around the 25,275 level and boasting a nearly 30-point premium over Nifty futures' previous close, suggest a cautiously optimistic start for the domestic market.

Yesterday saw a largely uneventful close, with the domestic equity market finishing flat but with a slight upward bias. The Nifty 50 successfully held above the 25,200 mark, closing at 25,212.05, up 16.25 points (0.06%). The Sensex mirrored this muted gain, adding 63.57 points (0.08%) to settle at 82,634.48.

So, what can investors and traders anticipate from these key indices – Sensex, Nifty 50, and Bank Nifty – as the trading day unfolds?

Sensex Navigates a Tight Range

The Sensex's daily chart reveals a "small candle" formation, indicating a day of range-bound activity and a clear tug-of-war between bullish and bearish forces.

Shrikant Chouhan, Head Equity Research at Kotak Securities, believes that the 82,300 level will serve as a crucial support zone. "As long as Sensex trades above this level, the bullish sentiment is likely to continue," Chouhan noted. He further suggests that the index could rebound towards its 20-day Simple Moving Average (SMA) or the 83,000 mark. A sustained upward push could even see it touch 83,600.

However, a slip below 82,300 could shift the sentiment, potentially leading the Sensex towards its 50-day SMA or the 82,000-81,800 range, he cautioned.

Nifty 50: Indecision Amidst Optimism

Delving into the derivatives segment, Nifty's Open Interest (OI) data shows significant call writing at the 25,300 and 25,400 strike prices, while maximum put OI is concentrated at 25,200.

Hardik Matalia, Derivative Analyst - Research at Choice Equity Broking, interprets this positioning as strong resistance near the 25,500 zone. "Nevertheless, the overall market sentiment remains cautiously optimistic, and a decisive close above this resistance level will be crucial to sustain the bullish momentum in the near term," Matalia explained.

On the technical front, the Nifty 50's "doji candle" formation on the daily chart, despite closing above 25,200, signals market indecision. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, described it as a "high wave type candle pattern," reflecting a "confusion state of mind among participants at the lower levels" and indicating market volatility.

Despite this, Shetti maintains that the underlying short-term trend for Nifty 50 remains positive. A decisive move above the immediate hurdle of 25,250 could propel the index towards 25,550 in the near term, with immediate support resting at 25,000.

Dr. Praveen Dwarakanath, Vice President of Hedged.in, echoed the sentiment about Nifty 50's immediate resistance at 25,200, reiterating that a breach could lead to 25,500. He further pointed to options writer data showing similar put and call writing at the 25,200 level for the current week's expiry, suggesting a likely range-bound movement. The convergence of ADX DI+ and ADX DI- lines also reinforces this expectation of sideways consolidation.

Adding to the analytical chorus, VLA Ambala, Co-Founder of Stock Market Today, anticipates Nifty 50 to find support between 25,150 and 25,040, while facing resistance near 25,400 and 25,320 during today's session.

Bank Nifty: Outperforming and Eyeing Higher Ground

The Bank Nifty index continued its impressive run, outperforming frontline indices by closing 162.30 points (0.28%) higher at 57,168.95 on Wednesday. Its daily chart also formed a doji candle with shadows, hinting at consolidation amidst strong stock-specific action.

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, highlights Bank Nifty's comfortable trading above both its short-term and long-term moving averages, reinforcing its bullish undertone. "Adding to the strength, the daily RSI is on the verge of crossing the 60 mark and remains in a rising trajectory — a positive sign for momentum traders," Shah stated.

He identifies the 57,400-57,500 zone as an immediate hurdle for Bank Nifty. A sustainable move beyond 57,500 could trigger a sharp rally towards 58,100, followed by 58,600 in the short term. Conversely, the 56,900-56,800 zone is expected to provide support in case of any immediate decline.

Hrishikesh Yedve, AVP Technical and Derivative Research at Asit C. Mehta Investment Intermediates Ltd., pointed out that Bank Nifty formed a bullish engulfing candle on the daily chart, signaling underlying strength. He placed the short-term hurdle for Bank Nifty in the 57,360-57,370 zone, with the 21-Day Exponential Moving Average (DEMA) near 56,775 acting as immediate support. Yedve advised short-term traders to await a breakout above 57,370 before initiating new long positions.

As Indian markets gear up for July 17, all eyes will be on these critical levels and global cues to determine whether the bulls can maintain their grip or if the bears will seize the opportunity.