The Indian stock market experienced a tumultuous session on Friday, marked by a significant downturn after an initially positive opening. Investor sentiments soured due to profit booking, exacerbated by rising tensions between India and Pakistan following recent terrorist incidents in Pahalgam, Kashmir. As a result, the Nifty 50 index plummeted by 207 points, closing at 24,039, while the BSE Sensex fell 588 points to finish at 79,212. The Bank Nifty index also encountered losses, dropping 537 points to settle at 54,664. Most sectoral indices ended in the red, with the Realty and Financial Services sectors suffering the largest declines, each plunging nearly 3%.

Positive Foreign Investment Amidst Market Decline

Despite the market’s struggles, foreign institutional investors (FIIs) continued their buying spree for the seventh consecutive day, contributing approximately ₹8,250 crores in inflows on Thursday. Moreover, easing tensions in the US-China tariff situation and positive developments regarding a potential trade deal between India and the US provided a glimmer of hope. However, the escalating geopolitical issues between India and Pakistan are likely to introduce further volatility in the Indian markets in the coming days.

Market Sentiment and Technical Analysis

Mehul Kothari, Deputy Vice President of Technical Research at Anand Rathi, noted that the cautious sentiment in the Indian stock market was largely driven by the distressing news from Kashmir. Kothari suggested that a market correction was anticipated for the Nifty 50, BSE Sensex, and other indices following a strong rebound post the Trump administration’s temporary tariff pause.

According to Kothari, the Nifty index displayed multiple negative divergences on the hourly chart, signaling an impending corrective move. He elaborated, "The Nifty has retested the crucial breakout level near 23,800, which has so far held strong. However, if the index breaches this support, we could see a further decline towards the 23,500 mark, where it aligns with the 200-day EMA. Conversely, a sustained movement above 24,400 could trigger renewed bullish momentum, potentially leading to a rally between 24,800 and 25,000. Given the current geopolitical climate, we recommend exercising caution and waiting for clearer market signals before taking aggressive positions."

Insights on Bank Nifty and Future Projections

Kothari also addressed the Bank Nifty index, which showcased impressive gains in recent weeks, nearing the 56,000 level early in the week. However, the index displayed signs of exhaustion, suggesting the need for a corrective phase. Kothari stated, "The Bank Nifty corrected back to the 54,000 zone and ended with marginal changes. A decisive drop below 54,000 could lead to further declines towards 53,000 to 52,500. On the upside, a breakout above 55,500 may reignite bullish activity in the banking sector."

Stock Recommendations Under ₹200

For investors looking for opportunities in stocks priced under ₹200, Kothari provided several recommendations:

• CESC: Buy around ₹152, targeting ₹162, with a stop loss at ₹144.
• Bandhan Bank: Sell on a rise near ₹167.50, targeting ₹157, with a stop loss at ₹172.
• GAIL India: Buy around ₹185, targeting ₹196, with a stop loss at ₹178.

In summary, while the Indian stock market faces challenges due to geopolitical tensions and profit booking, there remain opportunities for strategic investments under ₹200. Investors should remain alert and responsive to market signals as they navigate this volatile landscape.