Indian stock markets are likely to open slightly higher on Wednesday, January 21. The overall market remains weak and volatile. The GIFT Nifty also indicates a favorable start; the index was trading at 25,304, around 45 points above the last closing of Nifty futures.
On Tuesday, Indian markets saw a huge decline. The Sensex dropped 1,065.71 points or 1.28% and closed at 82,180.47, while the Nifty 50 lost 353 points or 1.38% and settled at 25,232.50.
The market trend was poor, and all sectoral indices retreated. Among them, Realty stocks suffered the most, losing almost 5%, followed by Auto, IT, and Metals, whose declines were between 1.5% to 2.5%.
Moreover, midcap and small-cap indices also lagged and each recorded a loss of over 2.5%.
From a technical standpoint, the Sensex on the daily chart formed a long bearish candle with a lower-top pattern on intraday timeframes.
Despite the momentum indicators pointing to oversold conditions, increasing the likelihood of a short-term technical bounce, the general trend is still weak.
The downside risks continue as long as the index remains below 82,300. The support levels are at 82,000 and 81,700. A move above 82,300 could lead to 82,500-82,800, likely as a corrective move instead of a trend reversal.
Nifty 50 is hovering around its 200-day moving average at 25,100-25,150, a critical long-term support zone.
If a strong downtrend is seen below 25,100, it may lead to the price moving towards 24,800 in the near term.
Derivatives data reveal significant call writing at 25,500 and noticeable put writing at 25,100, indicating a narrow trading range with a limited upside.
The MACD remains in the sell mode while RSI has gone beyond the oversold level at 28, which signifies that the selling is controlled and not panic-driven capitulation.
The Bank Nifty ended its session at 59,404, with a decline of 0.81%, and it dropped below its short-term averages. Immediate support is at the levels of 59,000-58,900, and resistance is seen at 59,800-60,000.
A strong close over 60,000 is required for the bullish momentum to be revived; until then, the index will probably continue to be range-bound with a negative bias.
Foreign institutional investors sold over Rs. 29,000 crore since the start of January.
The rupee weakening to 90.98 per dollar, the uptrend of US and Japanese bond yields, and the revival of the global trade tariffs' uncertainty have all contributed to the Investors' risk aversion.
The India VIX has increased to 12.7, up around 7%, indicating a greater volatility in the near term.
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