The Indian stock market has recently experienced notable fluctuations, particularly in light of rising tensions surrounding the India-Pakistan situation. Despite showing some resilience initially, the market faced significant sell-offs in the last days of the previous week. As a result, benchmark indices suffered steep declines, with the Nifty 50 index falling sharply and the BSE Sensex experiencing its most substantial drop since April.
Market Performance Overview
- The Nifty 50 plummeted 265 points or 1.1%, closing just above the 24,000 mark at 24,008.
- The BSE Sensex dropped 880 points, also losing 1.1%, and settled at 79,454.
- The India VIX, a measure of market volatility, surged to 22, indicating increased investor anxiety.
Insights on Market Trends
According to Mehul Kothari, Deputy Vice President of Technical Research at Anand Rathi, the Indian stock market is currently navigating a cautious landscape due to geopolitical tensions. Kothari emphasized that the Nifty 50 has immediate support at 23,800. If this threshold is breached, a further decline toward 23,500 could be expected.
Kothari commented, "The recent decline in the Nifty 50 was anticipated, as negative divergence in the RSI hinted at a potential correction. While the drop wasn’t unexpected, the geopolitical backdrop adds an unsettling layer. Moving forward, the 23,800 level is critical; falling below it could lead us to 23,500, which aligns with the 200 DEMA."
Market Outlook and Recommendations
For traders, Kothari advises caution. He notes the emergence of a bearish engulfing pattern on the weekly chart, suggesting potential further declines unless the Nifty decisively surpasses the 24,500 mark. He recommends that traders reduce aggressive long positions and consider hedging strategies.
The Bank Nifty index also struggled, sliding below the 54,000 level and ending the week down over 2%. It is currently near 53,500, which corresponds with the 38.2% Fibonacci retracement of its last rally. A breach of this support could open the door to further declines toward 52,600 and 51,800, the 50% and 61.8% retracement levels, respectively. Kothari added, "For any short-term relief and a return to safer territory, the index needs to reclaim the 55,000 level."
Stock Picks for Investors
As for actionable stock recommendations, Kothari suggests considering the following stocks as potential buys:
- PNB: Buy around ₹91, with a target of ₹97 and a stop loss at ₹88.
- NBCC: Buy near ₹91.50, targeting ₹100, and set a stop loss at ₹87.
- ZEEL: Buy around ₹115, aiming for ₹125, with a stop loss at ₹108.80.
Investors should keep a close eye on these recommendations as they navigate the complexities of the market in the coming days.
