Nifty, Sensex, Nifty Bank outlook for today: GIFT Nifty up 75 points; key levels to watch

Indian equity markets are set to begin the week on positive noted with a cautious footing amid persistent West Asia tensions and elevated crude oil prices continue to temper risk appetite. Markets are bracing for fresh US sanctions against Iran amid an already prolonged geopolitical standoff. The ensions continue to shape the broader market mood.

Indian equities could remain sideways with a mild recovery expected next week after last two weeks of fall. Monsoon progression, FII flows, crude oil prices and broader macroeconomic developments will remain key monitorables, while sector-specific opportunities are likely to drive broader market action, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.

GIFT Nifty, Asian markets & US stocks GIFT Nifty Futures on the NSE International Exchange were 74 points, or 0.30 per cent, up at 24,360, hinting at a positive start for the domestic market on Monday. Share markets were flat in Asia on Monday and oil prices eased as investors awaited details of threatened US sanctions on Iran due later in the session. Hang Seng and KOSPI were down 2 per cent, while Nikkei edged lower.

The US stocks closed higher on Friday but showed declines for the week, marked by investor jitters over fluctuating government bond yields and a lack of clarity on progress in the Middle East. The Dow Jones Industrial Average rose 0.98 per cent, to 53,277.01, the S&P 500 gained 0.43 per cent, to 7,674.37 and the Nasdaq Composite added 0.44 per cent, to 26,180.46.

Crude, US dollar, gold & more Bessent is due to hold a news conference later on Monday to outline sanctions on Iran. Brent slipped 1 per cent to $93.43 ahead of the announcement. US crude eased 1.1 per cent to $86.14 a barrel. The dollar was on the defensive after having lost 0.8 per cent last week at 96.832. The yellow metal firmed 0.4 per cent to $4,623 an ounce, having climbed 14 per cent in August so far. 

The market is likely to remain volatile in the near term as geopolitical uncertainty, elevated crude oil prices and global bond yields continue to influence investor sentiment, said Ajit Mishra, SVP of Research at Religare Broking. "Traders should avoid aggressively chasing prices and instead use meaningful declines to gradually accumulate fundamentally strong companies," he added.

FII-DII flows Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 542.71 crore on Friday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 2,124.14 crore on a net-net basis. FPIs pushed buying in Indian equities in August, infusing Rs 23,544 crore so far amid improving earnings and stable rupee.

A significant trend in the market is that FPIs are not buying attractively valued leading large banking or IT stocks, said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments . "Given India’s improving GDP growth and earnings growth perspective, FPIs are likely to sustain the buying trend. A headwind is the high bond yields in the US which is negative for equities."

Nifty50, Sensex & India VIX outlook The short-term market outlook remains weak. However, the 50-day SMA is expected to act as a crucial support zone for traders. As long as the market trades above this level, a pullback formation is likely to continue. On the higher side, the market could bounce back to the 20-day SMA or around 24,400/78,000, said Amol Athawale, VP of Technical Research at Kotak Securities.

"A successful breakout above 24,400/78,000 could push the market towards the 24,500-24,700/78,300-78,900 range. On the flip side, if the market falls below 24,150/76,900, sentiment could turn negative. Below this level, selling pressure is likely to accelerate, and the index could retest the 24,000/76,400 level," he added.

Sensex continues to trade around its 50-Day EMA but remains below the crucial 200-Day EMA, keeping the broader trend cautious, said Hitesh Tailor, Technical Research Analyst at Choice Equity Broking. "RSI at 49indicates subdued momentum, with no clear directional strength at present. Immediate support is placed at 77,000–77,380, while 77,720–78,000 remains the key resistance."

Nifty on the weekly chart formed a small negative candle with long lower shadow, which signals a formation of bullish hammer type candle pattern, not a classical one. The underlying trend of Nifty is positive and there is a chance of upside towards 24,500-24,600 levels by next week. Immediate support is placed at 24,100, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Momentum is gradually improving, with the RSI recovering to 46.13 from recent lows. India VIX at 11.20 remains historically low, suggesting limited volatility expectations and supporting a relatively stable trading environment unless a key technical level is decisively breached, said Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities.

Nifty Bank outlook Nifty Bank formed small-bodied candles with wicks on either side in 8 of the last 15 trading sessions, highlighting subdued volatility and indecision among market participants. The flat ADX further indicates a lack of volatility and a clear directional trend, said  Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

"Going ahead, the immediate resistance for Bank Nifty is placed in the 58,200-58,300 zone. Any sustainable move above this zone could result in Bank Nifty extending its pullback towards 58,700, followed by 59,000 in the short term. On the downside, the immediate support for Bank Nifty is placed in the 57,300-57,200 zone," he said.

Nifty Bank continued to witness range-bound movement with a bullish bias. It continues to trade above its 21, 55 and 100 day EMAs, indicating that the broader trend remains positive. The 55 day EMA is acting as a key dip-buying support and aligns with the 57,100-57,200 zone, making this an important support area, said Dr Ravi Singh, Chief Research Officer at Master Capital Services. 

"As long as this level remains intact, the buy on dips strategy is likely to remain favourable. On the upside, immediate resistance is placed near 58,000. A sustained breakout above this level could strengthen bullish momentum and trigger a move towards the 58,500 zone," it added.