The Indian stock market is likely to open higher amid relief in global markets as US President Donald Trump announced that a deal with Iran is complete and authorized the removal of the US naval blockade to open the Strait of Hormuz. GIFT Nifty also indicates a gap-up start, trading at 24,024 with a premium of 396 points from its previous Nifty futures close.
On Friday, the Sensex rose 1,695.40 points or 2.30% to settle at 75,527.95, while the Nifty 50 advanced 461.30 points or 1.99% to close at 23,622.90.
Foreign institutional investors (FIIs) remained net sellers, offloading shares worth Rs. 1,082.18 crore on June 12, while domestic institutional investors (DIIs) bought equities worth Rs. 5,341.29 crore.
Oil prices fell to their lowest level since March. Brent crude futures fell 4.74% to $83.19 a barrel and US West Texas Intermediate (WTI) declined 5.60% to $80.13.
Technically, the Sensex formed a large bullish candle on the weekly chart, which suggests positive sentiment and the index climbed 1.73% last week.
“The 74,800 and 74,300 levels would act as key support zones for positional traders. As long as Sensex remains above these levels, the uptrend is likely to continue. On the upside, it could continue rallying till 75,900 and 76,300-76,600. However, below 74,300, the uptrend would become vulnerable,” said Amol Athawale, VP Technical Research, Kotak Securities.
Below this level, he advises traders to exit their long positions.
Analysts highlight that the Nifty 50 has strengthened its bullish structure. Nifty witnessed a strong rally of 2% on Friday's session. Index in the process formed a strong bullish candle with a higher high and a higher low signaling continuation of the up move. The index also closed above its 20-day EMA.
Nifty on Friday's session closed above the last two weeks range 23,550-23,000 highlighting strength and continuation.
"Index sustaining above Friday's low (23,313) will keep the bias positive and open upside towards 23,800 and 24,000 levels in the coming sessions being the confluence of the 50 days EMA and higher band of the last 2 months falling channel," said Bajaj Broking.
On Friday, Bank Nifty rose 1,638.05 points or 2.97% to close at 56,814.80, forming a strong bullish candle on the daily chart which signals continuation of the positive momentum.
"The 20-day and 50-day EMAs are turning higher. Given the favorable price structure and strengthening momentum, we expect Bank Nifty to extend its upward trajectory and test the 57,500 level, followed by 58,300 in the near term. On the downside, the zone of 56,200-56,000 is likely to provide strong support and act as a cushion against any short-term corrective moves," said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, while sharing his thoughts on the current market scenario.
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