Sensex, Nifty outlook for tomorrow: After election day volatility, what's next for markets?

Benchmark stock indices Sensex and Nifty ended higher on Monday after seeing some profit booking in the afternoon session. Investor sentiment were supported by a favourable election outcome in West Bengal and better-than-expected Q4 earnings, as they helped markets look past West Asia-related concerns, said analysts. At close, Sensex stood at 77,269.40, up 355.90 points or 0.46 per cent. Nifty closed the day at 24,119.30, up 121.75 points or 0.51 per cent.

"Intermittent profit booking persisted amid uncertainty surrounding the US Project Freedom initiative to reopen the Strait of Hormuz. While the resolution path may take time, optimism around gradual progress continues. Crude prices holding below $110 are providing near-term comfort," Vinod Nair, Head of Research at Geojit Investments said.

Going ahead, he believes the market direction will hinge on geopolitical developments and oil price trends, given their impact on inflation, interest rates, the rupee, and corporate margins.

Nifty outlook
Nilesh Jain, VP- Head of Technical and Derivative research at Centrum Finverse Ltd said the NSE barometer opened on a gap-up note but failed to sustain above the 24,200 mark and eventually settled near its 50-DMA, placed around 24,110.

He said the immediate psychological support is seen at 24,000, followed by the 21-DMA at 23,900. A decisive breakout above 24,200 is essential to extend the upmove towards 24,500 level, Jain said.

"On the volatility front, the index eased by nearly 1% over the week to close around 18, and any further cooling in volatility could lend support to bullish momentum. The broader structure remains positive as long as the Nifty holds above 23,800, though some near-term consolidation cannot be ruled out," he said.

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, said he sees immediate resistance for Nifty in the 24,250-24,300 zone. Any sustainable move above this zone could result in Nifty extending its pullback towards 24450, followed by 24600 in the short term. On the downside, the immediate support for Nifty is placed in the 23980-23950 zone.

Sensex outlook 
Shrikant Chouhan, Head Equity Research at Kotak Securities said the the short-term texture of the market is non-directional and is likely to remain so in the near future. For day traders now, Sensex's 77,000 level or the 20-day SMA (Simple Moving Average) will act as key support zones, he said.

"Above these levels, the market could continue its positive momentum towards 77,700–78,000. On the flip side, below the 20-day SMA or 76,800, the market could retest the levels of 76,500–76,300," he said.