Sensex, Nifty outlook for tomorrow: Stock market strategy - Key levels | 4th straight day of gains?

Benchmark indices the BSE Sensex and the NSE Nifty settled 1 per cent higher on Monday, taking their recent winning run to the third straight session. The indices formed small bullish candles on the daily charts, with long lower wicks, suggesting strong buying at lower levels. Analysts are cautiously optimistic. They said continuation of this momentum, a fourth day of rise,  remains a possibility, provided there is follow-up buying in the next session. For the day, the BSE Sensex closed the day at 74,106.85, up 787.30 points or 1.07 per cent. Nifty climbed 255.15 points or 1.12 per cent to 22,968.25.

Sensex outlook 
Hitesh Tailor, Technical Research Analyst at Choice Equity Broking said Sensex has shown a continuation of the recovery trend, with improving price structure and sustained buying interest at lower levels. Key technical levels indicate that support is placed in the 73,300-73,500 zone, he said.
This zone is expected to act as a demand area on declines.  

"A resistance is seen around 74,500-74,800, where any further upside may face supply and profit-booking pressure. With a strong close and follow-through buying, the near-term outlook remains cautiously positive, though the index may witness some consolidation near resistance levels before any decisive breakout," Tailor said.

Anlaysts said the rebound over the past two sessions is encouraging; however, a decisive cool-off in crude oil prices and a corresponding decline in India VIX, still at elevated levels, remain critical for a sustained recovery. 

Nifty outlook
The index formed a bullish candlestick pattern with a higher high and a higher low, signaling continuation of the pullback from the extreme oversold territory, said analysts.

"The index in the process moved above its previous week high 22,941 for the first time in last 8 weeks. Volatility is expected to remain elevated in the near term, driven by geopolitical tensions and firm crude oil prices, which continue to weigh on overall market sentiment," Bajaj Broking said in a note. 

Ajit Mishra – SVP, Research at Religare Broking said a Nifty break above the 23,000 mark could further extend the up move towards the 23,400-23,500 zone, where the hurdle of the short-term moving average (20 DEMA) is placed. 

"On the downside, support is seen in the 22,500-22,000 range. Given the elevated volatility, traders are advised to maintain a cautious stance and focus on stock-specific opportunities, favoring relatively strong counters for long positions and laggards for shorting opportunities," he said.