Nifty shows small body candle formation: Outlook for Tuesday's trade

Indian benchmark indices closed lower for the second consecutive session, with FMCG and auto stocks dragging the markets down. The S&P BSE Sensex finished at 81,508.46, a decline of 200.66 points or 0.25%, while the Nifty50 ended at 24,619, down by 58.80 points or 0.24%.

Dr. Praveen Dwarakanath, Vice President at Hedged.in, shared his insights on the market's current trend. He noted that momentum indicators still show bullish signals for the Nifty index, although it is approaching overbought levels. The index is currently consolidating near a key resistance level of 24,850, with the last two days displaying an "insider candle" pattern, suggesting a loss of momentum. However, the Nifty remains above its 50-day moving average, which signals that the bullish trend could persist.

Data from options writers also indicates a range-bound move for the index, with significant call and put writing observed around the 24,700 strike price for the monthly expiry. This suggests that the Nifty may trade within a narrow range in the short term.

For traders, this setup suggests caution as the market consolidates, and it could be prudent to focus on a range-bound strategy for Tuesday.