According to ICICI Securities' Technical Head Dharmesh Shah, the Nifty has marginally settled around the four-month rising trend line which has been majorly held despite host of negativities around geopolitical concerns. The index settled at 24,175.65 last week, hovering in a broad 23,800–24,700 band before closing at 24,175.65. From a short-term perspective, defending past two weeks' low of ~24,000 would keep pullback options open towards 24,600. Failure to defend this level would result in extended correction with strong support placed around 23,600 as it represents the 50% retracement of April-August rally. The index is likely to open gap-down on back of global cues and rise in brent crude prices, with volatility expected to remain elevated tracking MSCI rebalancing. Religare Broking's Ajit Mishra confirms that the sharp decline has pushed Nifty closer to their initial downside target and support of 23,800, with a decisive break below this level potentially extending the correction towards 23,700–23,600. Mishra notes that given the prevailing combination of elevated crude prices, geopolitical uncertainty and weak market momentum, maintaining a cautious, stock-specific approach with strong focus on risk management is recommended.
As reported by ICICI Securities, the Nifty consolidated in a narrow range throughout the week and settled on a flat note, resulting in a high wave candle carrying higher high-low, indicating prolonged consolidation. The index has been confined in the entire March month's trading range of 24,989-22,284 for the past five months, which is a rare occurrence of prolonged range contractions that systematically set the stage for a directional move. Shah believes that as long as the index holds the swing low of 23,600, the buy-on-dips structure remains intact, with the current up move having laid the foundation for a secular up move. However, recent market action shows the Nifty closed at 23,914.45 after opening with a gap down, with the Sensex settling at 76,570.35, down about 0.49%. The decline was largely broad-based with auto, IT and FMCG stocks among major drags, while energy counters showed resilience. HDFC Securities' Nandish Shah notes that today's follow-through selling reinforces the near-term downtrend, with Nifty trading below all key moving averages, reflecting sustained selling pressure and weak sentiment.
Benchmark equity indices drifted lower in recent trading days amid concerns over high oil prices and spiking global bond yields, with the BSE Sensex down 1.44% or 1,112 points at 76,153 and the NSE Nifty 50 shedding 1.25% or 303 points at 23,873 for the week thus far. However, positive cues from global markets following easing bond yields are likely to lift market sentiment Friday morning. Overnight, the US markets - Dow Jones, NASDAQ and the S&P 500 surged more than 1%, while this morning in Asia, Nikkei advanced 0.5% and Kospi jumped over 1%. Ponmudi R, CEO of Enrich Money, notes that Indian markets are expected to begin the session on a firmer footing, supported by Wall Street's overnight rebound and gains across Asian equities as easing global bond yields provide some relief to risk assets. The GIFT Nifty quoted around 24,020 levels as of 07:20 AM, indicating a positive opening. On the upside, the 24,000–24,150 region is likely to act as the resistance zone, according to Mishra from Religare Broking.
According to the technical analysis, sector leadership shifted seamlessly to Pharma and Metal, while IT staged a strong rebound. On the flip side, FMCG continued to underperform the benchmark. The smallcap index has logged an impressive ~35% rally off April low and reclaimed its all-time high after 18 months, with historical data suggesting this is the initial leg of multi-year secular bull run rather than an overextended technical move. Shah believes the current up move has laid the foundation for a secular up move, with the bullish outlook anchored by major corrections of ~35% or more historically marking the beginning of fresh market up-legs rather than the end of broader bull cycles. However, broader markets also came under pressure with midcap and smallcap indices declining nearly half a percent, indicating widespread caution among participants.
Pabitro Mukherjee from Bajaj Broking flags that the daily stochastic has approached oversold territory, and buying demand is seen emerging in Nifty from the key support area of 23,800–23,600. Hence, a pullback towards the 50-day EMA placed around 24,150 cannot be ruled out in coming sessions. Nagaraj Shetti from Bajaj Securities cautions that the underlying trend of Nifty continues to be weak amidst choppy trends, with immediate resistance placed at 24,100 levels. Dhupesh Dhameja from SAMCO Securities highlights that the Nifty remains below its declining 10-DEMA, positioned near 24,081, maintaining pressure on the near-term structure. The Relative Strength Index (RSI) stands at 37.11, below its RSI average of 45.27 and the neutral 50-mark, indicating that momentum remains weak and has yet to show a convincing reversal. On the upside, a sustained move above 24,000–24,050 would be required to alter the immediate setup and could trigger mild short covering towards 24,180–24,250. Rupak De, Senior Technical Analyst at LKP Securities, notes that the short-term trend is likely to remain weak as the index continues to trade below the 50-EMA on the hourly chart, with a sell-on-rise sentiment may continue to prevail as long as the index remains below the 24,000-24,200 zone. On the downside, support is placed at 23,830 and 23,700, with a decisive close below 23,800 potentially exposing the index to the 23,600 region.
