Nifty, Sensex, Nifty Bank outlook for today: GIFT Nifty down 25 pts; key levels to watch

Indian shares were expected to open little changed on Wednesday, with elevated crude oil prices and rising global bond yields weighing on appetite for risk assets. The receding prospects of a deal to end the nearly six-month-old conflict in the Middle East drove Brent crude futures higher to $92 per barrel.

Indian equities may remain under pressure in the near term as elevated crude oil prices, US-Iran tensions and weak global cues weigh on sentiment. With Brent crude rising and the reopening of the Strait of Hormuz remaining unresolved, oil prices will remain a key monitorable for the rupee, inflation and foreign flows, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.

GIFT Nifty, Asian markets & US stocks
GIFT Nifty Futures on the NSE International Exchange were 24.60 points, or 0.10 per cent, down at 24,205.50, hinting at a muted start for the domestic market on Wednesday. Asian stocks came under ‌pressure, tracking ⁠overnight losses on Wall Street. KOSPI cracked more than 5 per cent, Nikkei was down 2.5 per cent. Hang Seng was inched higher.

Wall Street's stocks closed lower on Tuesday with semiconductors leading technology declines as Middle East uncertainty pushed bond yields to multiyear peaks, feeding concerns over borrowing costs and inflation. The S&P 500 lost 0.69 per cent to 7,691.76 and the Nasdaq Composite shed 1.33 per cent to 26,289.71. The Dow Jones Industrial Average fell 0.22 per cent, to 53,343.40.

Crude, US dollar, gold & more
Bond selling eased in steady Asian morning trade, but the inflation outlook ⁠remained troubling with Brent crude futures parked above $90 a barrel on no signs of progress toward a deal to open the Strait of Hormuz to oil tankers. The risk-averse mood has lent a little support to the dollar in currency markets, though moves were small. Spot gold was up 0.2 per cent ‌at $4,342.33 per ounce.

Investor sentiment remained subdued as Brent crude climbed following the expiry of the temporary US-Iran ceasefire, with Iran adopting a more aggressive stance and the US ruling out an extension, said Ajit Mishra, SVP of Research at Religare Broking. We recommend maintaining a cautious, stock-specific approach, with greater emphasis on prudent position sizing and risk management."

FII-DII flows
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 2,579.31 crore on Tuesday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 1,651.53 crore on a net-net basis.

Nifty50, Sensex & India VIX outlook
The weakness persists as the Nifty weekly options contracts expire. The index slipped below the 50EMA for the first time in many days, heightening bearishness in the market. The RSI remains in a bearish crossover and continues to decline, said Rupak De, Senior Technical Analyst at LKP Securities.

"Overall sentiment might favour the bears as it continues to lose bullish momentum. On the lower end, the fall might extend towards 24050–24000, where initial support is likely to emerge. On the other hand, resistance is visible at 24240," he added.

The daily chart consequently formed a bearish candle with virtually no lower recovery, while the close below the 50-Day EMA marks a deterioration in the short-term structure. The Sensex is trading below all key moving averages, and the RSI at 44.82 has slipped below the neutral 50 mark, signalling weakening momentum, said Sachin Gupta, VP of Technical Research at Choice Equity Broking.

"The broader setup has therefore turned more cautious, with 76,800–77,000 becoming an important line of defence. Holding this zone could encourage a technical rebound towards 77,600–77,800, whereas a decisive breakdown may extend the current corrective phase. The market favours a wait-and-watch approach," he said.

Momentum indicators have deteriorated noticeably. India VIX remains relatively subdued at 11.39, indicating that the current decline is orderly rather than panic-driven, said Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities.

Nifty Bank outlook
The prolonged range-bound movement in Nifty Bank caused key moving averages to flatten, reflecting the absence of a clear trend. Momentum indicators and oscillators also continue to signal a sideways bias. The daily RSI has been moving in a narrow band for the last 29 trading sessions, reinforcing the consolidation phase, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities

"Going forward, the 57,500-57,600 zone, where the 20-day EMA is placed, will act as a crucial resistance area. On the downside, the 56,900-56,800 zone, coinciding with the 100-day EMA, is expected to provide immediate support. A decisive breakout above the resistance zone or a breakdown below the support zone is likely to determine the next directional move, leading to a sustained trending phase in the Bank Nifty," he said.

Nifty Bank formed an inverted hammer like candle which remained contained inside previous session price range signaling consolidation with corrective bias around the 50 days EMA. The broader 8 weeks consolidation range remains intact between 56,500 and 58,700. The current consolidation and a breakout or breakdown will signal a directional momentum, said Bajaj Broking.

"Within the consolidation index is facing resistance around 58,000 levels, a move above the same will open upside towards 58,500-58,700 levels. On the downside, a decisive break below 57,000 would signal extended corrective move towards the 56,500-56,200, being the confluence of 200 days EMA and the lower band of the broader consolidation range," it added.