Nifty, Sensex, Nifty Bank outlook for today: GIFT Nifty down 140 points; key levels to watch

Indian equity indices are set for a sharp fall at market open on Friday as Brent crude soared to $110 per barrel as a widening Middle East war forced investors to flee ​risk assets.  India ​is particularly vulnerable to higher oil prices. A busy IPO season, with large offerings from NSE and potentially Jio Platforms, has also weighed on markets.

Indian equities are likely to remain under pressure. Brent crude is rising with escalating attacks on commercial shipping increasing the risk of supply disruptions amid the intensifying war. The conflict has entered its seventh month with no signs of de-escalation, 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 140.50 points, or 0.60 per cent, down at 23,343.50, hinting at a negative start for the domestic market on Friday. Asian stocks tumbled on Friday as soaring oil prices inflamed inflation risks. KOSPI and Nikkei tumbled nearly 3 per cent each, while Hang Seng was down more than a per cent.

US stocks ended down on Thursday after producer price data for August ​and surging oil prices stoked worries the Fed will hike interest rates next week, with climbing yields made ‌stocks less attractive. The S&P 500 declined 0.58 per cent to end at 7,591.75. The Nasdaq declined 0.65 per cent to 26,081.73, while the Dow ‌Jones Industrial ⁠Average declined 0.60 per cent to 52,064.10.

Crude, US dollar, gold & more
Brent crude climbed to a four-month high of $109.97 a barrel on Friday after a 6 per cent overnight jump, capping a weekly gain of nearly 13 per cent. The US dollar lifted with higher Treasury yields. It was last steady on Friday at 99.04. In ​commodity markets, gold rose 0.3 per cent to $4,328 an ounce after dropping nearly 2 per cent overnight, failing to catch some of the safe-haven bids.

Investor sentiment remained fragile as Brent crude moved back above $100 per barrel amid escalating tensions in the Middle East and concerns over potential disruptions to global energy supplies, said Ajit Mishra, SVP of Research at Religare Broking. "We remain negative on the index and recommend a selective, stock-specific approach with positions on both sides and 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 438.28 crore on Thursday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 1,025.85 crore on a net-net basis.

Nifty50, Sensex & India VIX outlook
The short-term market outlook remains weak technically, but due to temporary oversold conditions, we could see a pullback rally from the current levels, said Shrikant Chouhan, Head of Equity Research at Kotak Securities. "For day traders, 23,400/74,700 would act as key support zones, while 23,500/75,000 would be the immediate hurdles for the bulls," he said.

A move above 23,500/75,000 could extend the bounce back to 23,700-23,750 /75,500-75,700. Conversely, below 23,400/74,700, selling pressure is likely to accelerate. If the market drops below this level, it could slip to 23,300-23,250 /74,500-74,200, Chauhan adds.

Nifty50 has formed a hammer pattern on the daily timeframe, suggesting a pause in the recent bearish trend. Immediate support is placed in the 23,380–23,400 zone on the lower end, said Rupak De, Senior Technical Analyst at LKP Securities. "On the higher end, resistance is placed at 23,550–23,600. A sustained move above 23,600 could extend the recovery towards 23,800."

Sensex remains below the 50-DEMA at around 76,953 and the 200-DEMA near 78,274 on the daily charts, keeping the broader trend weak. RSI has slipped to around 30.21, indicating persistent bearish momentum and near-oversold conditions. Immediate support is placed at 74,400–74,600, while resistance is seen at 75,200–75,500, said Sachin Gupta, VP of Technical Research at Choice Broking.

Meanwhile, India VIX declined 1.05 per cent to 11.80, suggesting that volatility remains relatively contained despite the fragile technical structure, said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

Nifty Bank outlook
Nifty Bank on the daily chart formed a small bullish candle with a lower high and a lower low signaling consolidation with corrective bias. It is placed around the lower band of the last 10-week range 56,000-58,700. A breach below the 56,000 levels will signal extension of the corrective decline towards 55,300 and 54,800 levels in the coming week, said Bajaj Broking.

"Immediate bias in the index continues to remain down and only a formation of higher high and higher low on a sustained basis in the daily chart will signal a pause in the current down trend. While sustaining above 56,000 levels on a closing basis will signal continuation of the last 10 weeks consolidation," it added.

From a technical standpoint, Nifty Bank continues to trade below its key moving averages, indicating a weak short-term trend. Momentum indicators also remain subdued, with the daily RSI positioned at 38.83, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

"Going forward, the 56,000-55,900 zone is expected to act as a crucial support area for the index. A sustained breach below 55,900 could intensify selling pressure and lead to a further decline towards the 55,400 mark in the near term. On the upside, the 200-day EMA zone of 56,700-56,800 is likely to act as a significant hurdle," he added.