The Indian stock market resumed its downward trajectory on Friday, with the benchmarks Sensex and Nifty 50, falling over half a percent each, tracking weakness in global equities, amid surging crude oil prices and spike in bond yields.
The BSE Sensex declined over 500 points, or 0.7%, to trade near 74,350, while the NSE Nifty 50 slipped below 23,300 level. During the session, the 50-share index touched an intraday low 23,231.40 so far.
The fall in the Indian stock market came amid heightened global risk-off sentiment, primarily driven by a sharp surge in crude oil prices due to escalating US-Iran war in the Middle East, while rising global bond yields and concerns over persistent inflationary pressures added to the negative sentiment.
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Worries of high inflation stoked fears of interest rate hike by the US Federal Reserve at the upcoming policy meet, denting investors risk-appetite.
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Nifty 50 has slipped below the 23,300 mark and the near-term technical setup remains cautious. However, the index recovered from the 23,250 zone, making it the immediate support to watch for a short-term recovery.
Here's what technical charts suggest
Shitij Gandhi, AVP - Equity Technical Research, SMC Global Securities noted that Nifty's technical chart has turned decisively bearish after breaking below the recent consolidation range, confirming a lower-high, lower-low structure.
He said that the index is now approaching the major swing-support zone near 23,150 – 23,200, and the chart suggests that recovery attempts may face resistance around 23,550 – 23,600, followed by 23,750.
“On the upside, the key trend line resistance is placed near 23,950–24,000, with 24,100 acting as a crucial hurdle. Sustained trading below 23,600 would keep the short-term bias negative and expose the index to further downside. A decisive rebound above 23,750 would be required to ease the bearish setup and indicate potential base formation,” said Gandhi.
According to Hitesh Tailor, Technical Research Analyst at Choice Broking, a sustained hold above 23,250 could lead to a pullback towards 23,600, which is now an important resistance zone as it was a previous support level and may act as supply on any rebound.
“Below 23,250, the 23,000 – 23,070 zone remains the strong support area, aligned with the previous higher-low structure. Holding this zone would be important to prevent further deterioration in the short-term structure, while a decisive break below 23,000 could extend the downside momentum,” said Tailor.
On the upside, he believes a sustained move above 23,600 would be required for the Nifty 50 index to regain strength and improve the technical setup.
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From a sectoral perspective, Tailor notes Nifty IT is showing relative resilience, having taken support around the 0.50 Fibonacci retracement level of its recent rise.
“This support holding can provide a base for recovery in the IT index, making select IT stocks worth tracking if they continue to sustain their respective technical support levels,” he said.
What Should Be Strategy Ahead?
The ongoing weakness in the Indian stock markets for a cautious and stock-specific approach.
Tailor advises avoiding aggressive positions while Nifty 50 remains below 23,600.
“Traders can look for opportunities around the 23,250-support zone, while the 23,000 – 23,070 area remains crucial for positional support. Any recovery should preferably be accompanied by improvement in price momentum and participation,” said Tailor.
According to him, the overall bias remains cautious to bearish in the near term as Nifty is trading below key technical levels and major EMAs.
“A hold above 23,250 can support a short-term recovery towards 23,600, while sustaining 23,000 – 23,070 will be crucial for preventing further downside. A decisive move above 23,600 would be the first sign of technical improvement,” he said.
Stocks, Sectors In Focus
Ruchit Thakur, Market Analyst, VT Markets advises investors to take a cautious approach in the market, rather than making aggressive lump-sum investments during the initial sell-off.
“While it makes sense to selectively accumulate high-quality companies as valuations turn favorable, maintaining adequate liquidity for ongoing volatility is crucial. A sustained market recovery will depend primarily on crude prices stabilizing or cooling off, alongside a reduction in geopolitical tensions,” said Thakur.
During an oil-driven correction, he focuses on defensive and relatively less crude-sensitive sectors such as pharmaceuticals, healthcare, utilities, select financials and IT exporters.
“Stocks such as Sun Pharmaceutical Industries, Dr Reddy's Laboratories, HCL Technologies, Infosys, HDFC Bank and NTPC could be considered gradually, subject to valuation. Pharma and defensive sectors may provide better resilience if volatility remains elevated,” Thakur said.
Within energy, he believes ONGC and Oil India are relatively better positioned because higher crude prices can improve upstream realisations; both gained even as the broader market declined today.
“The strategy should be to stagger purchases rather than trying to catch the exact bottom and prioritise balance sheet strength and earnings visibility,” he added.
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