Stock market today: Key levels for Nifty, Sensex & Nifty Bank ahead of potential sell-off

Indian shares are set to open sharply lower on Thursday amid the rising crude oil prices following a fresh escalation in the Iran war, while a hawkish ​US Federal Reserve, citing persistent inflation pressures, added to growth worries. Adding to domestic pressure, HDFC Bank's part-time Chairman Atanu Chakraborty had resigned citing differences with top management.

Nifty futures on the NSE International Exchange were 474.40 points, or 2 per cent, up at 23,302, hinting at a negative start for the domestic market on Thursday. Asian stocks slid on Thursday amid major ​escalation in war in West Asia rattled investors with the hawkish tone from the US Fed. Nikkei fell over 2 per cent, while Hang Seng and KOSPI dropped over a per cent.

Markets may remain cautious as investor sentiment may carry on to be sensitive to developments in West Asia. Markets will track geopolitical developments, crude oil prices and FII trend for cues. Updates on India–US trade deal and the upcoming US Fed interest rate decision will also be key, said Siddhartha Khemka, Head of Research of Motilal Oswal Financial Services.

Wall Street ended sharply lower on Wednesday after the Federal Reserve held US and took stock of economic risks from surging oil prices ‌and the US and Israeli war with Iran. The S&P 500 fell ​1.36 per cent to end the session at 6,624.70 points. The Nasdaq declined 1.46 per cent to 22,152.42 ‌points, while ⁠the Dow Jones Industrial Average tanked 1.63 per cent to 46,225.15 points.

Oil prices rose as much as 3 per cent on Thursday after Iran attacked several energy facilities across the Middle East following a strike on ​its South Pars gas field, a major escalation in Tehran's war with the US and Israel. Brent futures were up $3.69, or 3.44 per cent, to $111.07, while US West Texas Intermediate crude rose $2.29, or 2.38 per cent, to $98.61.

The dollar strengthened across the board, also buoyed by the Fed predicting just one more cut this year. The ​dollar index is up 2.5 per cent since the war broke out at the end of February. The index was last at 100.16, little changed in early trading but holding on to ‌ Wednesday's gains.

Lingering geopolitical tensions, weakness in the rupee, and the possibility of renewed volatility in crude oil prices continue to keep market participants cautious, said Ajit Mishra, SVP of Research at Religare Broking. "Participants are advised to avoid aggressive positioning and instead focus on stock-specific opportunities, maintaining disciplined risk management."

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 2,714.35 crore on Wednesday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 3,253.03 crore on a net-net basis.
 

Nifty50 & Sensex outlook

Technically, the market held positive momentum. An uptrend continuation formation on intraday charts and a bullish candle on daily charts indicate a further uptrend from the current levels. The market has completed one leg of the pullback rally, and we could see some profit booking at higher levels, said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

"Buying on intraday dips and selling on rallies would be the ideal strategy. On the downside, 23,600/76,000 and 23,500/75,700 would be the immediate support zones, while 23,950–24,000/77,000-77,300 could act as crucial resistance areas for the bulls. However, below 23,500/75,700, the sentiment could change. If the index falls below this level, traders may prefer to exit their long positions," he said.

The daily RSI has reversed from the deep oversold zone and currently it is in a bullish crossover, suggesting positive momentum, said Rupak De, Senior Technical Analyst at LKP Securities. "The sentiment is likely to remain positive with a possibility to rise towards 24,250. While, a support is placed at 23,500, which is likely to remain a support for the short term."

A reasonably long candle was formed on the daily chart with minor upper shadow. Technically, the upside bounce of the last three sessions confirms a short-term bottom reversal pattern at the recent swing low. This is positive indication, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities,

"Nifty witnessing sharp bounce back from the lows that signals chances of higher bottom formation during any short-term consolidation or dip. Further sustainable up move from here could open the next upside target of around 24,000-242,00 levels in the near term. Immediate support is placed at 23,550," he said.
 

Nifty Bank views

Nifty Bank has also witnessed a strong pullback over the past three sessions. Sustaining this pullback is crucial, as any sharp reversal candle could halt the recovery and push the index lower again, said  Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities.

"The immediate resistance for Nifty Bank is placed in the 55,600–55,700 zone. Any sustainable move above this zone could result in Nifty Bank extending its pullback towards 56,000, followed by 56,300 in the short term. On the downside, the zone of 55,000–54,900 zone is likely to act as a strong support," he said.

Nifty Bank formed a bullish candle with a higher high and a higher low indicating an extension of the pullback for the third session in a row following the recent sharp decline. Volatility is expected to remain elevated in the near term, driven by uncertain global cues and rising geopolitical tensions, which continue to weigh on overall market sentiment, said Bajaj Broking.

"A follow through strength above the same will open further upside towards the 57,000-57,300 levels in the coming sessions being the confluence of the last week high and 20 days EMA. A breach below Wednesday low 54689 will signal pause in the current pullback and can led to some consolidation in the range of 53,300-55,600 in the coming sessions," he said.