Sensex, Nifty outlook for tomorrow: Can market bulls make a comeback?

Sensex and Nifty on Wednesday snapped a three-day winning run, with the 30-pack BSE benchmark barely holding above the 78,500 level at close, while the NSE barometer slipped below the 24,400 mark. Analysts were mixed on the technical setup, with some seeing short-term weakness, while others said more signals were needed to confirm a negative trend. For the day, Nifty settled at 24,378.10, down 198.50 points or 0.81 per cent. Sensex closed at 78,516.49, down 756.84 points or 0.95 per cent.

Sensex outlook
Aakash Shah, Research Analyst at Choice Equity Broking Sensex has slipped below immediate support zones, signalling short-term weakness. The immediate support, he said, is now placed near 77,800–78,000 levels, while resistance is seen at around 79,200–79,300 levels.

"Overall, the market structure has turned short-term bearish, with a risk of further consolidation or downside if key support levels are breached, although intermittent pullbacks cannot be ruled out," he said.

Shrikant Chouhan, Head Equity Research, Kotak Securities said Sensex slipped below its support of 79,000 after a gap-down opening. Throughout the day, it faced consistent selling pressure at higher levels. On daily charts, it has formed a small bearish candle, indicating indecisiveness between the bulls and the bears, he said.

"For day traders, as long as the Sensex trades 79,000, the weak sentiment is likely to continue. On the downside, if it slips to 78,200, further downside is likely, which could drag the index up to 78,000. On the flip side, above 79,000, it could retest levels of 79,300-79,500," Chouhan said.

Nifty outlook
Osho Krishan, Chief Manager - Technical & Derivative Research at Angle One called Wednesday's fall a 'pause', saying the market’s technical structure remains constructive, with the Nifty continuing to trade between its 50- and 100-day EMA on the daily chart.

"From a technical perspective, the confluence of the 50 per cent Fibonacci retracement level and the 50-day EMA in the 24,260-24,220 range is expected to provide strong cushion to any shortcomings. Additionally, the bullish gap between 24,100 and 23,900 is likely to act as a crucial support zone, reinforcing the market’s underlying strength," he said.

On the upside, he sees multiple resistance zones are positioned near 24,600-24,660, coinciding with the 100-day EMA.

Rupak De, Senior Technical Analyst at LKP Securities said the RSI is in a bearish crossover on the hourly chart. Besides, on a smaller timeframe, the index has fallen below the 20-EMA, suggesting waning bullishness, De said.

"The India VIX remained positive; however, it remains below the 50EMA, confirming decreased fear among investors. The setup looks balanced and non-indicative. Any development coming from the Middle East will have an impact on Thursday's opening. On the lower end, support is placed at 24,200, below which the index might drift down towards 23,900," he said.