Sensex, Nifty outlook for tomorrow: Stock indices give up gains - Bulls losing edge?

Stock market outlook for Friday, April 17: Benchmark indices Sensex and Nifty gave up morning gains to settle in the red on Thursday. In the process, the two indices formed small bearish candles on the daily chart, with lower wicks, reflecting the late recovery. Analysts said the market took a breather after the recent rally, where dips were consistently getting bought into. They believe the market is likely to turn rangebound, with a positive bias in the short-term, until decisive breakout above key resistance levels are observed. There is indecisiveness among the bulls and the bears at present, analysts said.

Sensex closed the day at 77,988.68, down 122.56 points or 0.16 per cent. Nifty settled at 24,196.75, down 34.55 points or 0.14 per cent.

Sensex outlook
Shrikant Chouhan, Head Equity Research at Kotak Securities said after a gap-up opening, the market consistently faced selling pressure at higher levels. From the day's highest point, Sensex corrected nearly 1,050 points. Additionally, on daily charts, the BSE benchmark has formed a small bearish candle, which indicates indecisiveness between the bulls and the bears.

"We are of the view that the 78,500-78,700 zone would act as an immediate resistance for the bulls. As long as the market is trading below this, the correction formation is likely to continue. On the downside, the market could retest levels of 77,300-77,000," Chouhan said.

Nifty outlook
Rajesh Bhosale, Technical Analyst at Angle One said the session can be seen as a breather for the bulls after a sharp rally of more than 2000 points over the past couple of weeks. This, it said, was largely expected, as prices had approached a crucial supply zone in the 24,400–24,600 range, a confluence of resistance marked by key moving averages (50–89 EMA) and the 61.8 per cent retracement of the recent decline from 26,000.

"While there are no immediate signs of weakness, a fresh leg of momentum would require a decisive breakout above this resistance zone, which could pave the way for the next phase of the rally. Until then, prices are likely to consolidate within a range, which would be considered healthy after the recent sharp upmove. On the downside, the bullish gap in the 24,000–23,900 zone continues to act as immediate support.

Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities said the index appears to be in a consolidation phase, with 24,100 on Nifty acting as a strong base and 24,260–24,300 as a key resistance band. A decisive breakout on either side is required to establish the next directional move, he said.

"The near-term uptrend of Nifty remains intact and there is a possibility of further consolidation or minor dip in the next 1-2 sessions, before bouncing back again," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities noted that Nifty, 
for the second consecutive trading session, managed to close above its 50-day EMA. He felt  the 24,320–24,350 zone is likely to act as a key resistance for the index.