Sensex, Nifty outlook for tomorrow: Market regains momentum; key index levels to track

Benchmark Sensex and Nifty advanced on Monday, forming bullish candles on the daily charts, with upper wicks. Analysts said while indices have made reversal formations on technical charts that hints at further gains, immediate resistance at key levels cannot be ruled out. For the day, the BSE Sensex ended at 24,092.70, up 194.75 points or 0.81 per cent. Sensex settled at 77,303.63, up 639.42 point or 0.83 per cent. 

Despite the positive close, the underlying macro environment remains complex. The persistent geopolitical tensions in the Middle East continue to act as a ceiling for a sustained bull run, said Vikram Kasat, Head Advisory, PL Capital.

"We are seeing a 'risk-on' sentiment in midcaps and smallcaps, but the large-cap trajectory will likely stay dependent on the next leg of Q4 earnings and any potential de-escalation in global supply route disruptions. The outlook for the immediate term remains one of cautious optimism," he said. 

Sensex outlook, key levels to watch
Aakash Shah, Research Analyst at Choice Equity Broking said overall Sensex structure suggests a pullback rally within a range-bound trend, with momentum improving in the short term. However, a decisive breakout above resistance range 77,900-78,000 is required to confirm a sustained uptrend, while failure to hold support of 76,700–76,500 may again lead to consolidation, he said.

A bullish candle on daily charts and a reversal formation on intraday charts indicate that a pullback formation is likely to continue in the near future, said Shrikant Chouhan, Head Equity Research at Kotak Securities.

"For day traders, 77,000 and 76,700 would act as crucial support zones. As long as the market is trading above these levels, the bullish sentiment is likely to continue. On the higher side, the index could move up to 77,700. Further upside may also persist, potentially lifting the index up to 78,000," Chouhan said.

"On the flip side, below 76,700, the uptrend would become vulnerable. Under such circumstances, traders may prefer to exit their long positions," he said.

Nifty outlook, key levels to watch
A long bull candle was formed on the daily chart that Nifty placed within the high low range of Friday's long red candle. This is indicating a formation of inside day type candle pattern which signals possible comeback of bulls after a reasonable downward correction, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities. 

"Bullish pattern like higher tops and bottoms has started to form on the daily chart and the Friday's Nifty swing low of 23,813 could now be considered as a new higher bottom of the pattern," he said.

During the day, said  Rupak De, of LKP Securities, Nifty found resistance at the 38.20 per cent Fibonacci retracement level of the previous fall. 

"Going forward, the index might continue to face resistance at 24,115–24,150. A decisive move above 24,150 is required to witness a sustained rally towards higher levels. On the lower end, support is placed at 24,000, below which weakness might increase," he said.