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Nifty 50, Sensex Today: What to Expect from the Indian Stock Market on May 30

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By SK_INSIGHTMEDIA

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Nifty 50, Sensex, and Bank Nifty. Get expert technical analysis, market predictions, and trading strategies to navigate the anticipated volatility.

Introduction

The Indian stock market, represented by the benchmark indices Sensex and Nifty 50, is expected to open lower on Thursday, mirroring the losses in global markets. Here’s an in-depth look at what traders and investors can anticipate in today’s trading session.

Negative Start Expected

Indicators on Gift Nifty point to a negative opening for the Indian benchmark index. Gift Nifty was trading around the 22,660 level, approximately 70 points below the previous close of Nifty futures.

On Wednesday, the domestic equity indices extended their losing streak for the fourth consecutive session, with the Nifty 50 managing to stay just above the 22,700 level. The Sensex fell by 667.55 points (0.89%) to close at 74,502.90, while the Nifty 50 dropped 183.45 points (0.8%) to settle at 22,704.70.

Technical Analysis of Nifty 50

Bearish Candlestick Pattern

The Nifty 50 formed a bearish candlestick pattern on the daily charts, characterized by an upper shadow, which indicates selling pressure at higher levels.

“On the daily chart, the uptrend has weakened. Wednesday’s negative closing has led to the Nifty closing below the previous swing high of 22,795. However, Nifty continues to hold above the 20 and 50-day SMA. The 14-day RSI at 56.57 is falling and has now moved below its 9-day EMA, indicating weakening momentum,” said Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities.

Immediate Support and Resistance Levels

Subash Gangadharan believes that further downsides are likely once the immediate support of 22,685 is broken. Immediate resistance is now pegged at 22,826. Markets are expected to remain volatile as we approach the announcement of election results.

Insights from Options Data

On May 29, the Nifty 50 index fell by 183 points to close at 22,704, with bears maintaining control. According to Rupak De, Senior Technical Analyst at LKP Securities:

“During the day, heavy call writing activities were seen at the 23,000 and 22,800 strikes, while put writing activities were visible at the 22,800 and 22,700 strikes. The option data suggests that Nifty might expire around 22,800. On the other hand, a fall below 22,700 might trigger additional selling pressure in the market.”

Market Strategy Recommendations

V.L.A. Ambala, Co-founder of Stock Market Today (SMT), noted that the Nifty 50 is trading approximately 11% away from the index’s 20-day EMA on the monthly timeframe, indicating a price divergence that could correct over time.

“If this bullish trend continues, the anticipated correction could be smaller. However, if the index plunges below 22,380, we could witness more selling pressure. I recommend a wait-and-watch strategy to navigate the situation. Strategies like F&O Strangles, Debt Spread, and selling futures with covered calls could help to make the most of this corrective move,” Ambala suggested.

Long-term investors may find buying opportunities if the index reaches the support levels, but she recommends proceeding with caution. For the next trading session, the Nifty Index could find support around the 22,570 – 22,450 levels and face resistance near the 22,700 – 22,750 levels.

Bank Nifty Analysis

The Bank Nifty ended 641 points lower at 48,501 on Wednesday, forming a bearish candlestick pattern on the daily timeframe.

Support and Resistance Levels

“The Bank Nifty index has demonstrated a clear shift in sentiment by opening below its support level at 49,000 and trading beneath it. It closed near its 21-day EMA at 48,400. If Bank Nifty fails to maintain above the 21-day EMA, further selling pressure may drive it down to 48,000,” said Rupak De.

Consequently, he believes 48,400 now serves as the support level for Bank Nifty, with 49,000 acting as the new resistance level.

Market Outlook

Volatility Ahead

As the market approaches the announcement of election results, volatility is expected to remain high. Traders should brace for potential swings and adjust their strategies accordingly.

Long-term Perspective

For long-term investors, market corrections often present buying opportunities. It’s essential to focus on quality stocks with strong fundamentals and consider gradual accumulation during dips.

Risk Management

In these volatile times, risk management becomes crucial. Diversifying portfolios, using hedging strategies, and maintaining a cautious approach can help mitigate potential losses.

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Conclusion

The Indian stock market is likely to see a cautious start on May 30, with both Nifty 50 and Sensex expected to open lower. Traders and investors should prepare for a volatile session as market sentiments remain influenced by global trends and upcoming domestic events. By staying informed and adopting appropriate trading strategies, market participants can navigate these challenging conditions effectively.

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