Nifty, Sensex, Nifty Bank outlook for Wednesday: GIFT Nifty up 88 points; key levels to watch today

Indian shares are likely to open higher on Wednesday, tracking gains in global equities, as oil prices fell on hopes the Strait of Hormuz could reopen after Iran resumed talks with neighbouring Oman on managing the strategic ‌waterway. Despite the ongoing ⁠tensions, the US is beginning to send personnel back to some diplomatic missions in the region.

Indian equities are expected to see some recovery following the decline in crude oil prices as hopes of easing US-Iran tensions provided some relief to oil markets, while developments around Iran and the Strait of Hormuz remain key monitorable for oil prices, the rupee and foreign flows, 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 87.80 points, or 0.36 per cent, up at 24,559.50, hinting at a positive start for the domestic market on Wednesday. Asian stocks stuttered on Wednesday as a drop in oil prices dragged bond yields lower on hopes that the critical Strait of Hormuz could reopen. KOSPI and Hang Seng rose a per cent each, while Nikkei added half a per cent.

Wall Street's main indexes closed higher on Tuesday as investors found ‌some relief in drops in oil prices and bond yields. The Dow Jones Industrial Average rose 160.24 points, or 0.30 per cent, to 53,577.40, the S&P 500 gained 24.38 points, or 0.32 per cent, to 7,677.24 and the Nasdaq Composite jumped 171.11 points, or 0.66 per cent, to 26,151.30.

Crude, US dollar, gold & more
Brent crude futures fell for a third straight day on Wednesday, sliding more than 2 per cent to $86.41 per barrel on the prospect of more supply coming through the strait, which handled a fifth of the world's traded oil before the war. The dollar index was at 98.93. Spot gold last fetched $4,646.08 per ounce, just shy of the three-month high. Bitcoin was 0.6 per cent higher at $78,704.

Investor sentiment remained fragile due to escalating geopolitical tensions, and reports of the US considering fresh economic measures against Iran weighed on market sentiment, said Ajit Mishra, SVP of Research at Religare Broking. "Given the geopolitical risks and persistent volatility, we continue to advocate a stock-specific approach and maintain disciplined risk management."

FII-DII flows
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 1,181.66 crore on Tuesday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 2,493.41 crore on a net-net basis.

Nifty50, Sensex & India VIX outlook
Nifty50 climbed back above the 20 EMA after a few days of underperformance. The RSI has entered a bullish crossover, indicating improving momentum. The trend may remain strong, with the possibility of upside. On the higher side, resistance is placed at 24,400/24,480. On the lower side, immediate support is placed at 24,240, said Rupak De, Senior Technical Analyst at LKP Securities.

A long bull candle was formed on the daily chart that has engulfed the choppy movement. This market action indicates a formation of 'Bullish Engulfing' pattern, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities. The next upside levels to be watched are around 24,500-24,600 in the near term. Immediate support is placed at 24,100, he said.

Sensex witnessed a sharp recovery as the strong buying momentum resulted in a bullish green daily candle, indicating improved demand from lower levels, said Sachin Gupta, VP of Technical Research at Choice Equity Broking. "Sustaining above 77,000–77,125 support will be important for maintaining the positive undertone, while a sustained move above 77,800–78,000 may strengthen recovery."

Volatility Index India VIX remains subdued at 11.75, indicating low expected volatility and supporting the possibility of a measured, range-bound move until a decisive breakout occurs, said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

Nifty Bank outlook
Nifty Bank formed a neutral candle with shadows on both sides, reflecting indecision at current levels. A decisive breakout on either side will be crucial for the next directional move, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. "57,100–57,000 will act as immediate support, while 57,900–58,000 will act as an immediate hurdle. A sustained move above 58,000 could trigger a fresh rally towards 58,400."

Nifty Bank highlighted volatility and profit booking at higher levels as the index closed around the 50 days EMA. The broader 8 weeks consolidation range remains intact between 56,500 and 58,700. The index may extend the current consolidation and only a breakout or breakdown will signal a directional momentum, said Bajaj Broking.

"Within the consolidation index is facing resistance around 58,000 levels. Index sustaining below the same will open downside towards 57,000 and 56,500 levels, being the confluence of 200 days EMA and the lower band of the broader consolidation range. On the higher side a move above 58,000 will open upside towards 58,500-58,700 levels in the coming weeks," it added.