Indian stock market indices Sensex and Nifty 50 are likely to open higher on Monday following gains in global markets amid optimistic investor sentiment.

The trends in Gift Nifty also point to a positive start for the Indian benchmark index. The Gift Nifty was trading at around 24,670, a premium of almost 72 points over the previous close of the Nifty futures.

On Friday, domestic stock indices each closed almost 2 percent higher, with the Nifty 50 reclaiming the 24,500 mark.

The Sensex rose 1,330.96 points or 1.68% to close at 80,436.84, while the Nifty 50 was 397.40 points or 1.65% higher at 24,541.15.

Nifty 50 formed a long bull candle with lower shadow on the daily chart.

“Technically, this pattern suggests an attempt at an upside breakout of the consolidation move around the 24,400 level. Nifty has now moved towards the hurdle of the previous major downside gap on August 5 and the said downside gap is likely to be closed soon around 24,700,” said Nagaraj Shetti, senior technical research analyst at HDFC Securities.

The recent downside breakout seems to have been a fake breakout that turned into a strong upside jump on Friday, Shetti added. According to him, the next uptrend to watch is near 24,700 and the next 25,000 in the near future.

Here’s what you can expect from Nifty 50 and Bank Nifty today:

Nifty 50 Prediction

Nifty 50 witnessed a decisive upside breakout on August 16 and closed the day with strong gains of 397 points above the 24,500-mark.

“Nifty 50 recovered above 24,500 after consolidating in a range of 400-500 points for days. In the short term, Nifty could continue its consolidation in the range of 24,300-24,550. Only a decisive move above 24,550 could trigger an upside move in the index,” said Rupak De, senior technical analyst at LKP Securities.

He believes that a buy-on-dips strategy could be more effective unless Nifty falls significantly below 24,300.

VLA Ambala, co-founder of Stock Market Today, noted that the Nifty index formed a green candlestick pattern with a long lower shadow while trading in a 500-point range last week and that the benchmark index broke its range after eight days of consolidation and closed the session on Friday above its 50-day EMA after finding support at the 20-day EMA on the daily time frame.

“The benchmark Nifty index’s RSI readings of 55 on daily, 69 on weekly and 77 on monthly basis suggest that it is trading in an overvalued zone on higher time frames. In this situation, traders and investors should be cautious while selecting stocks for short-term trading. I suggest they select stocks that are consolidating at or below their sector valuation as they could yield better returns,” Ambala said.

Against this backdrop, she expects Nifty to find support between 24,470 and 24,350 and face resistance between 24,630 and 24,745 in the coming session.

Bank Nifty Forecast

The Bank Nifty index rose 790 points or 1.59% to close at 50,517 on Friday, forming a bullish candlestick pattern with a lower shadow on the daily charts.

“Bank Nifty has formed a double bottom reversal formation on the daily charts, which is largely positive. 50,000 would be the hallowed support levels for short-term traders. On the higher side, the 20-day SMA or 50,900 and 51,200 would act as crucial resistance areas for trend-following traders,” said Amol Athawale, VP-Technical Research, Kotak Securities.

Vaishali Parekh, Vice President, Technical Research, PL Capital – Prabhudas Lilladher said the Bank Nifty has witnessed a sharp pullback from the key 100-period MA level of 49,700 to improve the bias and on improving sentiment, a further rise can be expected once the resistance barrier of 50,800 is clearly breached, with higher targets of 52,000 and 53,400 being targeted in the coming days.

According to them, Bank Nifty would have a weekly range of 49,500 – 51,800.

Disclaimer: The views and recommendations expressed above are those of individual analysts or brokerage firms and not of Mint. We advise investors to seek advice from certified professionals before making any investment decision.