The stock market experienced a significant shift on Wednesday, as the benchmark indices, Nifty 50 and Sensex, saw their first decline in eight days. The Sensex faced a steep drop of 728.69 points, closing at 77,288.50. This downturn was largely attributed to profit-taking in the banking and IT sectors, especially in light of the upcoming monthly derivatives contract expiry. Meanwhile, the Nifty 50 also took a hit, slipping by 181.80 points, to finish at 23,486.85.

Key Market Trends

In the preceding week, both indices had shown impressive gains, with the BSE benchmark rising by 4,188.28 points or 5.67%. The Nifty 50 mirrored this performance, climbing by 1,271.45 points or 5.67%. However, the momentum shifted as investors opted to secure their profits amid growing uncertainties.

• Sensex: Closed at 77,288.50 (down 0.93%)
• Nifty 50: Closed at 23,486.85 (down 0.77%)

Factors Behind the Sell-off

Vinod Nair, Head of Research at Geojit Investments Limited, pointed to several factors influencing the market’s downturn. He emphasized that profit-taking was a natural response after the recent surge, particularly as the market braced for upcoming US tariff announcements. Sectors heavily reliant on the US market, notably pharmaceuticals and IT, faced notable selling pressure.

Oil Prices and Market Stability

In a related development, oil prices saw a slight uptick, spurred by US sanctions on Iran and anticipated reductions in US crude inventories. The influx of foreign institutional investors (FIIs), along with improvements in domestic economic fundamentals and attractive valuations, suggests that the market may regain stability in the coming days.

Technical Insights from HDFC Securities

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, shared his analysis on recent market movements. He noted that the Nifty 50 encountered resistance at the 23,800 mark, leading to its descent. A long bear candle formed on the daily chart indicates a potential short-term correction after a robust rally.

• Support Levels: Anticipated support around 23,400-23,200.
• Resistance Levels: A bounce back could challenge the 23,800 resistance again.

Shetti remains optimistic that the Nifty 50 could rebound after establishing higher bottom formations.

Stocks to Watch

For investors looking for opportunities amid market fluctuations, Shetti recommends two stocks this week:

• Nelco Ltd

  • Buy Price: ₹896
  • Target Price: ₹955
  • Stop Loss: ₹865
  • Timeframe: 1 week
• Hindustan Aeronautics Ltd (HAL)
  • Buy Price: ₹4,135
  • Target Price: ₹4,400
  • Stop Loss: ₹4,000
  • Timeframe: 1 week

With these insights, investors can navigate the current market landscape more effectively, keeping an eye on future developments that may influence trading strategies.