Indian stock markets experienced a notable downturn on Tuesday as the Sensex and Nifty indices relinquished their initial gains, largely due to profit-taking and rising concerns about global trade dynamics. Despite a strong start, the selling pressure from major stocks led to a significant drop. Market analysts remain cautiously optimistic, emphasizing key technical indicators to monitor in the upcoming days.
Profit-Taking Pressures Market Indices
The BSE Sensex, which initially opened positively, tumbled by 829.51 points, or 1.06%, from its intraday peak, sinking to a low of 77,880.84 by midday. Meanwhile, the NSE Nifty also faced losses, dropping 242.05 points to close at 23,627.55. This decline is largely attributed to profit booking at elevated levels and renewed apprehensions surrounding global trade tariffs.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that while the market momentum currently favors buyers, the lack of solid fundamental support may restrict further upward movement. He expressed, "The ongoing uncertainty regarding trade tariffs is creating a cautious atmosphere, hindering the market’s ability to maintain a prolonged rally."
Global Uncertainty Fuels Caution
Vinit Bolinjkar, Head of Research at Ventura, highlighted that external factors such as possible adjustments in U.S. monetary policy and persistent geopolitical tensions could heighten market volatility. "Although the market displays positive trends, investors should remain vigilant and consider these external risks when making investment choices," he advised.
Ajit Mishra, Senior Vice President of Research at Religare Broking, emphasized that the recent market strength is fueled by renewed interest from foreign institutional investors (FIIs) and short-covering within the derivatives market. He noted that the Nifty’s ability to reclaim its 200-day DEMA reflects positive sentiment, suggesting that broad-based buying across sectors could help sustain this momentum.
Technical Insights: Support and Resistance Levels
Osho Krishan, Senior Research Analyst at Angel One, identified the 23,500 zone as a crucial support level, supported by the 89-day DEMA and a recent bullish gap between 23,433 and 23,400. On the upside, he sees 23,800 as an intermediate resistance point, near the swing high from February 25, followed by 24,100, which aligns with the 200-day DSMA.
Hrishikesh Yedve, Assistant Vice President of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, echoed similar sentiments, marking immediate support at 23,510 (100-DSMA) and short-term resistance at 23,810. He advised traders to adopt a "buy on dips" strategy, while recommending that low-risk investors consider booking profits around the 23,800 level.
Market Outlook: Cautious Yet Strategic
Aditya Gaggar, Director at Progressive Shares, pointed out that the Nifty’s formation of another bullish candle on the daily chart indicates it may be entering an overbought territory. He projected immediate resistance at 23,800, with 23,400 serving as a vital support level. Following the recent one-sided rally, Gaggar suggested that a pullback could provide a healthy correction opportunity.
As market indices encounter resistance at higher levels, analysts advise a careful yet opportunistic approach. With robust technical support around 23,500 and resistance near 23,800, traders are encouraged to adopt a "buy on dips" strategy while also implementing trailing stop losses. Given the potential for external risks, including uncertainties related to trade tariffs and global monetary policies, strategic stock selection and disciplined profit-taking will be crucial in the sessions ahead.
