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Indian equity markets are expected to open on a cautious-to-flat bias for today’s session after the sharp sell-off in the previous session. Early signals from GIFT Nifty indicate a mildly positive start, with the index trading around 26,002, up 35 points from its previous close.
On Thursday, indices continued to decline for the fourth day in a row. The Sensex lost 780 points, or 0.92%, closing at 84,180.96, while the Nifty 50 dropped 264 points, or 1%, and settled at 26,140.75.
Sentiment remains fragile amid weak global cues, geopolitical uncertainty, and foreign fund outflows.
Technically, Sensex saw continued rejections around the 85,000 level, a clear sign of strong resistance. The daily candle formed a bearish candle that suggests a loss of momentum and a short-term consolidation.
The 83,600-83,700 area is the most significant support zone on the downside.
On the upside, immediate resistance is at 84,600-84,700. Resistance is expected to be immediate on the upside. As long as the index does not recover this band, volatility is going to continue with a cautious undertone.
The Nifty's close at 25,900 is a sign of the short-term breakdown from the consolidation area of 26,000. The next support is in the 25,800-25,700 zone, a key demand area.
If this support is broken, selling pressure may increase to 25,400-25,300. On the contrary, 26,000 is the first resistance level, followed by 26,050-26,150, close to the 20-day exponential moving average.
The momentum indicators show weakness, as the RSI is at 26.6 and the MACD is below the zero line, indicating that the market remains bearish.
The Bank Nifty still leads the broader market; the index has been close to the significant support level of 59,500.
If there is a breakdown below this level, it could result in a move to 59,000-58,700.
On the other hand, 60,000 remains a key hurdle, followed by a stronger resistance at 60,300-60,500.
Amidst the decline in global commodity prices, the prices of metals dropped by over 3% on Thursday. Moreover, the geopolitical issues connected to the trade and energy supply caused the oil and gas sectors to lose value.
Market segments like PSU banks, power, and capital goods stocks all registered a decline of 2-3% as the investors turned risk-averse. IT stocks went down as the Q3 earnings season is approaching.
The short-term weakness, however, is offset by the medium-term expectations of stronger corporate earnings for Q3 in oil and gas, automobiles, NBFCs, capital goods, metals, and cement sectors.
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