Market Outlook for 06 August 2024

Nifty Prediction for Tomorrow - 06th August

The negative global cues led to a significant gap down for Nifty at the start of the week. The index corrected to make an intraday low below 23900, but it managed to end the day above 24000 with a loss of more than two and a half percent.

Our markets reacted sharply to the global equity markets sell-off seen on Friday evening. However, our markets had already indicated a probability of a short-term corrective phase during end of last week as the Nifty had a negative divergence with the RSI, which we had highlighted in our earlier report.

INDIA VIX, surprisingly rallied by 50 percent during the day to surpass the 20 mark, which indicates nervousness due to the uncertain global environment. The CBOE VIX (volatility index in the U.S.) also rallied sharply and such sharp up moves in VIX are not seen in normal dips within an uptrend.

Technically, Nifty has now breached its 40-DEMA support and has formed a ‘Lower Low’ compared to the recent ‘Budget Day’ swing low of 24074. Hence, the short-term trend looks negative and hence, we continue with our cautious approach on the markets and advise traders to stay on the sidelines and avoid bottom fishing till we see signs of reversal. 

If the index breaks Monday’s low, then it can correct towards 23630 in the near term. On the higher side, 24350 and 24500 will be seen as hurdles on the pullback move.  

                 Indices react to global markets sell-off, VIX rallies sharply 

Bank Nifty Prediction for Tomorrow - 06th August

The Bank Nifty index breached its swing low support of 50440 and corrected sharply along with the benchmark index. The Bank index too rebounded marginally from the 50 percent retracement support level which was placed around 49720.

This will be seen as crucial level in the coming session as if this gets breached, then the correction could extend towards 48860 in the short term. We continue with our advice to avoid bottom fishing the banking space for now as it also was an underperforming sector in the recent upmove in markets.

Nifty, Bank Nifty Levels and  FINNIFTY Levels:

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