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The Indian stock markets are expected to remain volatile for the session after staging a recovery in the previous session. GIFT Nifty indicates a slight gap-down start, trading at 23,680 with a discount of 20 points from its previous Nifty futures close.
On Thursday, the Sensex gained 789.74 points or 1.06% to close at 75,398.72, while the Nifty 50 rose 277 points or 1.18% to settle at 23,689.60.
Foreign institutional investors (FIIs) net bought shares worth Rs. 187 crore on May 14, while domestic institutional investors (DIIs) purchased shares worth Rs. 684 crore.
Sectorally, the market remained positive. The Nifty Pharma, Nifty Healthcare and Nifty Metal indices rose between 2% and 3%, while Nifty IT was the only major sectoral index to close in negative territory.
Technically, the Sensex formed a bullish candle on the intraday chart, which supports further uptrend from the current levels.
For day traders, 74800 and 75100 would act as a key support zone. Above these levels, the pullback is likely to continue. On the higher side, the index could move up to 76,200. Further upside may also continue, potentially lifting the index to 76,500-76,700. However, below 74,800, the uptrend would become vulnerable. In that case, traders may prefer to exit their long positions," said Shrikant Chouhan, Head of Equity Research at Kotak Securities.
According to Bajaj Broking Research, the Nifty 50 formed a sizable bullish candle with a higher high and higher low, indicating a pullback from oversold territory after the recent correction.
"A move above 23,800 will extend the pullback toward 24,100 levels. While failure to move above the same will signal extension of the corrective decline toward 23,400 and 23,100 levels," stated Bajaj Broking Research.
From a short-term perspective, the index needs to consistently form higher highs and higher lows and sustain above 23,800 to confirm a reversal of the recent corrective trend. Immediate support is seen in the 23,200-23,000 zone, which coincides with the lower end of the April 8 gap area and the 61.8% Fibonacci retracement of the prior rally from 22,182 to 24,601.
On Thursday, Bank Nifty declined 672.80 points or 1.26% to close at 54,128.95 and continues to trade below its key moving averages.
The index also formed a bullish candle, reflecting sharp intraday volatility and a strong recovery from oversold territory. The index is positioned near the crucial resistance zone of 54,400-54,600.
"A move above the same will signal extension of the pullback toward 55,000 levels. While failure to move above the same will signal extension of the corrective decline toward 53,500 and 53,000 levels", said Bajaj Broking.
For the downside, key support for Bank Nifty is placed at 52,700-52,400, corresponding to the April 8 gap area and the 61.8% retracement of the earlier rally from 49,955 to 57,456.
