The Indian stock market is poised for a shaky start as Thursday unfolds, with the benchmark indices, Sensex and Nifty 50, expected to open lower. This dip comes on the heels of troubling signals from global markets, particularly following former U.S. President Donald Trump’s implementation of a hefty 25% tariff on automotive imports. Additionally, the trends on the Nifty futures indicate a weak opening, with the Gift Nifty trading around the 23,500 mark, reflecting a discount of approximately 22 points from the previous close.
Market Performance Overview
On Wednesday, the Indian equity markets faced a downturn after a week-long rally. Investors engaged in profit booking, leading to significant losses. The Sensex plunged by 728.69 points, or 0.93%, closing at 77,288.50. Meanwhile, the Nifty 50 fell by 181.80 points, or 0.77%, settling at 23,486.85.
Insights on Nifty 50 and Bank Nifty
Nifty 50 Outlook
The recent performance of the Nifty 50 marks a notable shift, breaking a streak of seven consecutive gains. According to Hardik Matalia, a derivative analyst at Choice Broking, the highest Open Interest (OI) on the call side is observed at the 23,600 and 23,700 strike prices, indicating strong resistance. Conversely, the put side shows substantial OI at the 23,300 strike price, suggesting a critical support level.
- Key Support Levels: 23,400 – 23,200
- Resistance Levels: 23,800
Technical Analysis
Nagaraj Shetti, a senior technical research analyst at HDFC Securities, notes a bearish candle formation on the daily chart, signaling the onset of potential short-term corrections. He anticipates that the Nifty 50 could see a rebound after establishing a higher bottom.
- Current Trend: Healthy downward correction
- Bounce Expectation: Possible move towards 23,800 after support restoration
Bajaj Broking Research emphasizes that the Nifty 50’s recent bearish candle suggests a consolidation phase following an impressive 1,900-point rally over just 15 sessions. They project a consolidation range of 23,850 to 23,200, utilizing this period to address the overbought conditions.
Bank Nifty Analysis
The Bank Nifty index also felt the pinch, closing down by 398.95 points, or 0.77%, at 51,209. Following an initial uptick, the index experienced significant profit-taking, forming a red candle on the daily chart, indicating underlying weakness.
- Support Levels: 50,990 (200-Day Simple Moving Average), followed by 50,640
- Resistance Levels: 51,880 and 52,000
Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta, advises traders to keep a close watch on these levels for potential trading opportunities.
Bajaj Broking Research reiterates that the Bank Nifty is undergoing a corrective decline for a second consecutive session ahead of the monthly expiry. They project a consolidation range of 52,000 – 50,500, anticipating a foundation for the next upward movement.
Conclusion
As the Indian stock market braces for a challenging day, investors should remain vigilant. The potential for short-term corrections alongside strong resistance and support levels presents both risks and opportunities for strategic trading. Keeping an eye on market trends will be crucial for navigating this dynamic landscape.
