Nifty, Sensex, Nifty Bank outlook for today: GIFT Nifty down 200 pts; key levels to watch

Indian equity markets are headed for a gap-down start on Thursday amid the rising geopolitical concerns in West Asia, which has pushed crude oil prices higher. Traders are awaiting RBI's monetary policy due tomorrow amid inflation and growth concerns led by falling rupee and persistent FII outflows.

Markets are likely to remain volatile in the near term amid escalating tensions in West Asia, which continue to keep crude oil prices elevated and triggering persistent foreign outflows, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. "Investor sentiment may remain cautious as the lack of meaningful progress in the ongoing US-Iran negotiations continues to fuel concerns over global energy supplies, inflationary pressures and broader macroeconomic stability."

GIFT Nifty, Asian markets & US stocks GIFT Nifty Futures or Nifty futures on the NSE International Exchange were 203.20 points, or 0.86 per cent, down at 23,312.50, hinting at a negative start for the domestic market on Thursday. Asian stocks fell at the start of trading as renewed fighting between the US and Iran rattled stocks. KOSPI and Nikkei dropped two per cent, while Hang Seng was down a per cent.

Wall Street stocks pulled back from record highs on Wednesday as flaring tensions in the Middle East and rising crude prices stoked inflation jitters and convinced investors to take some profits. The Dow Jones Industrial Average tanked 1.21 per cent to 50,687.07, the S&P 500 lost 0.74 per cent, to 7,553.72 and the Nasdaq Composite fell 0.89 per cent to 26,853.98.

Crude, US dollar, gold & more Brent crude futures were 0.7 per cent lower at $97.12 a barrel as trading resumed on Thursday after Lebanon and Israel agreed to implement a ceasefire. The US dollar index held steady at 99.45 after a three-day rally. Gold rose 0.5 per cent to $4,455.71, firmly within the trading channel. Bitcoin fell 1.3 per cent to $64,047.39.

The weakness was primarily driven by renewed geopolitical tensions in the Middle East following fresh hostilities involving Iran, which pushed Brent crude prices higher, said Ajit Mishra, SVP of Research at Religare Broking. "We continue to maintain a cautious stance and recommend a stock-specific approach with strict risk management."

FII-DII flows Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 5,616.56 crore on Wednesday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 5,740.89 crore on a net-net basis.

Nifty50 & Sensex outlook The market has formed a promising reversal pattern on intraday charts, and formed a dragonfly doji kind of candlestick formation on daily charts, indicating indecisiveness between the bulls and the bears. 23,250/74,000 would act as a key support zone. As long as the market is trading above this, the pullback formation is likely to continue, said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

"On the higher side, the market could bounce back to 23,500/74,600 and 23,600/75,000. On the flip side, below 23,250/74,000, the market could retest 23,150/73,700. Further downside may also continue, which could drag the index to 23,050/73,500. The intraday market texture is non-directional; hence, level-based trading would be the ideal strategy for day traders," it added.

Sensex managed to recover strongly from the crucial 73,300–73,500 support zone, indicating buying interest at lower levels. It continues to face resistance near the 74,800–75,000 zone, where selling pressure has emerged repeatedly in recent sessions. A decisive move above this resistance area could improve short-term sentiment, said Hitesh Tailor, Technical Research Analyst at Choice Equity Broking.

Nifty recovered smartly during the day but failed to reclaim the 20 EMA on the hourly chart, keeping the possibility of another decline alive. A lower-top, lower-bottom formation is visible on the hourly time frame, indicating a bearish trend in the recent price structure, said Rupak De, Senior Technical Analyst at LKP Securities. 

"On the other hand, a positive divergence is visible on the hourly RSI, suggesting some improvement in momentum. However, the short-term trend remains weak, with the potential for the index to move towards 23,000 if it falls below 23,300. On the higher side, 23,600 is likely to act as a crucial resistance level," he adds.

Nifty Bank outlook Nifty Bank traded within a falling parallel channel during the first half of the session. It has formed a bullish candle on the daily charts with a noticeable lower wick, reflecting buying interest at lower levels. It continues to trade below key short and long-term moving averages, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

"A follow-through buying move will be crucial to sustain and extend its ongoing pullback. The immediate resistance for Bank Nifty is placed in the 54,600-54,700 zone. Any sustainable move above this zone could result in Bank Nifty extending its pullback towards 55,100, followed by 55,500 in the short term. The immediate support for Nifty Bank is placed in the 53,800-53,700 zone," it added.

Nifty Bank formed a second consecutive bullish candle with a lower low and a higher high in the daily chart, highlighting pullback from the key support area amid stock specific action. Index is likely to extend consolidation in the range of 52,500-55,000 only a breakout or breakdown will signal a directional moment, said Bajaj Broking.

"Index has key support placed at 52,700-52,500 being the confluence of the lower band of the 8th April bullish gap area and the 61.8 per cent retracement of the previous pullback (49,955-57,456). On the higher side resistance is placed at 54,600-55,000 levels being the confluence of current week high and 20 days EMA," it added.