Trade Setup For Nov. 3: Nifty Likely To See Correction; Support Seen At 25,300

The NSE Nifty 50 snapped on Friday its four-week winning streak, showing signs of exhaustion. The index may see some correction in the upcoming month, say analysts.

The index has erased its four consecutive weeks of gains and currently hovers near a crucial make-or-break zone, said Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities. "A follow-through move below Friday’s low of 25,700 could further dampen buyer sentiment and indicate a shift in near-term momentum," he added.

He also added that the index has formed a double-top formation on the daily chart and a shooting star pattern on the weekly chart indicating a cautious stance.

"Going ahead, markets are likely to remain range-bound with a positive bias as investors monitor global developments and foreign fund flows," said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services.

Strong support is seen around 25,500–25,300, said Bajaj Broking. The brokerage also added that it is likely to hold as it is the confluence of the recent breakout zone and is key retracement of previous up move and 20 days EMA.

The Bank Nifty has formed a bearish candle with a lower high and lower low signaling profit booking at a higher level, said Bajaj Broking. "Going ahead, index to extend consolidation of the last two weeks in the range of 57500-58500 thus forming base after the next leg of up move," Bajaj Broking.

Nifty Bank support is likely to be placed at 57,300 and 57,500 aligning with the previous breakout zone. Stronger support lies around 56,800-56,500.

"The index displayed visible fatigue on the daily chart, pulling back from its recent peak after testing the upper threshold of its rally," said Om Mehra, Technical Research Analyst, SAMCO Securities.

The benchmark indices ended the week in red with Nifty snapping its four-week winning streak. Nifty 50 ended 0.60% lower at 25,722.10 and Sensex closed 0.55% lower at 83,938.71 on Friday. The Nifty fell over 0.64% during the day to 25,711.20, while the Sensex was down 0.59% to 83,905.66.

The rupee showed some recovery and traded 5 paise higher at 88.64 against the dollar in early trade on Friday, tracking lower crude oil prices and weaker American currency.