Nifty, Sensex, Nifty Bank outlook for today: GIFT Nifty down 90 points; key levels to watch

Indian equity benchmark indices are likely to open little changed on Wednesday as sentiment remained subdued amid fresh escalation in tensions in the Middle East ​and a resulting spike in Brent crude toward $100 per barrel. Investors globally remain focused on US inflation ‌data ⁠expected later this week, a key factor in determining the Fed's rate action next week.

Indian equities are likely to remain under pressure amid weak global cues, elevated crude prices and continued concerns over supply disruptions following the latest escalation in US-Iran hostilities around the Strait of Hormuz, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. Investors will track crude prices and BRICS Summit in New Delhi, he said.

GIFT Nifty, Asian markets & US stocks
GIFT Nifty Futures on the NSE International Exchange were 89.10 points, or 0.38 per cent, up at 23,660.50, hinting at a weak start for the domestic market on Wednesday. Asian stocks were mixed in the early trade. KOSPI gained more than 1.75 per cent, while Nikkei and Hang Seng were little changed.

US stocks ended lower on Tuesday amid the hostilities in the Middle ​East lifted oil prices and investors awaited inflation data that could affect the chance of an interest rate hike. The S&P 500 declined 0.58 per cent to end the session at 7,673.52 points. The Nasdaq dipped 0.32 per cent to 26,421.41 points, while ​the Dow Jones Industrial Average declined 1.18 per cent to 52,786.07.

Crude, US dollar, gold & more
The dollar index was at 98.15, close to its lowest level in almost two weeks. The Middle ‌East war intensified on Tuesday and Brent crude futures ​jumped 1.5 per cent to $99.5 per barrel.

The sharp outperformance of mid- and small-cap stocks over the past five to six months may be difficult to maintain going forward, said Vinod Nair, Head of Research, Geojit Investments. From a strategic perspective, a greater focus on large-cap stocks and non-equity ETFs appears safer. Sector-wise, defensive and deep-value areas can continue to provide an edge to the portfolio, he said.

FII-DII flows
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 123.19 crore on Tuesday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 1,349.64 crore on a net-net basis.

Nifty50, Sensex & India VIX outlook
The market has been consistently facing selling pressure at higher levels. The market has formed a bearish candle on daily charts, and it is holding a lower top formation on intraday charts, which is largely negative, said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

"For day traders, 23,750/75,800 would act as an immediate resistance zone. Below this, a weak formation is likely to continue. On the downside, the market could retest the levels of 23,500-23,450/75,200-75,000. On the flip side, if the index closes above 23,750/75,800, the pullback could extend till 23,850-23,900/76,000-76,300," it added.

A long bear candle was formed on the daily chart that placed at the support of 23,600. However, there is no sign of any upside recovery from near the supports, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities "Having placed at the crucial lower supports around 23,600 there is a possibility of bounce back from near 23,600-23,500 in the short term. Immediate resistance is placed at 23,800."

The near-term bias remains bearish, with Sensex continuing to trade below its key moving averages and momentum indicators pointing towards weakness. Support is placed at 75,000–75,300, while 75,800–76,000 has turned into the immediate resistance zone. A sustained hold above 76,000 would be required for a meaningful recovery, said Hitesh Tailor, Technical Research Analyst at Choice Equity Broking.

The RSI stands at 34, sliding closer to oversold territory. India VIX settled at 11.14, up 4.31 per cent, indicating volatility ticked higher amid the decline, said Om Mehra, Technical Research Analyst, SAMCO Securities.

Nifty Bank outlook
Nifty Bank slipped below its 20-day, 50-day and 100-day EMA, which is a negative sign from a trend perspective. The combination of a breakdown below key support levels and declining momentum indicators points towards a cautious outlook for the banking index in the short term, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

"The 56,400-56,300 zone will act as an immediate support area. Any sustained move below 56,300 could trigger downside and drag it towards the 55,800 level. On the upside, the 57,000-57,100 zone, coinciding with the 100-day EMA, is likely to act as an immediate hurdle. As long as the index remains below this resistance band, the broader bias is expected to remain negative," he added.

Bank Nifty formed a second consecutive bearish candle with a lower high and a lower low signaling continuation of the corrective decline. Index in the process closed below the immediate support area of 57,000. It is sustaining below 57,000 will signal extension of decline towards the key short-term support area of 56,500-56,200 levels, said Bajaj Broking.

"Overall, the broader consolidation range remains intact between 56,500 and 58,700. We expect it to extend the consolidation and only a breakout or breakdown will signal a directional momentum. A move above 57,000 will lead to consolidation in the range of 57,000-58,000," it added.