Sensex, Nifty Shed 3% In July, Broader Markets Underperform: What Should Be Your Trading Strategy Now?
Stock Market Today: India VIX rose 3.01% to 11.54, suggesting reduced complacency but sustained caution. Sensex and Nifty 50 snapped a four-month winning streak on July 31.
Stock Market Today: Domestic equity benchmarks Sensex and Nifty 50 trimmed losses on Thursday, July 31, and snapped a four-month winning streak after US President Donald Trump imposed a tariff of 25% on India starting Aug. 1 which triggered a knee-jerk reaction from foreign investors.
Investors viewed the US tariff threat as a pressure tactic and hoped for lower rates once negotiations conclude. Wednesday evening, Trump announced the tariff rate on all goods coming from India and an unspecified penalty for buying Russian crude oil and military equipment.
The frontline indices fell about 3% each in July, and the broader market underperformed, on foreign capital selloff and as investors digested lacklustre earnings from IT services companies and most financials.
Stock Market Today: Sensex, Nifty pare gains to halt two-day rally
Halting its two-day rally, the 30-share BSE index declined 296.28 points, or 0.36 per cent, to settle at 81,185.58 after recovering some lost ground during the afternoon trade. During the morning session, it tanked 786.71 points, or 0.96 per cent, to 80,695.15. Nifty dropped 86.70 points or 0.35 per cent to 24,768.35.
On Thirsday, India VIX volatility index rose 3.01% to 11.54, suggesting reduced complacency but sustained caution in the market. The benchmarks fell nearly 1% in morning trade. Fourteen of the 16 major sectors ended lower on the day.
The broader mid-caps and small-caps lost about 1% each. Textile manufacturers such as Welspun Living, Vardhman Textiles, KPR Mills and Gokaldas Exports lost between 3.2% and 5.1% on the day, and were the worst hit by Trump's tariff threat.
Sensex, Nifty Fall 3% In July: What Should Traders Do Now?
According to Feroze Azeez, Joint CEO, Anand Rathi Wealth Ltd, "The Indian market is currently being driven largely by domestic investors, and FIIs are almost 85% short. Therefore, a major sell-off is not expected. Some volatility is likely, any dips will be buying opportunities for investors with even 2-3 year time frames as we have already had a 10 month time correction," said Feroze Azeez, Joint CEO, Anand Rathi Wealth Ltd.
Rupak De, Senior Technical Analyst at LKP Securities noted that Nifty 50 failed to sustain at higher levels. The index continues to trade below the 50 EMA, confirming a bearish trend. The RSI is in a bearish crossover.
"Despite several negative setups, a hidden positive divergence has been observed over the past 2–3 days, indicating a potential bullish reversal. This setup may play out well if the Nifty decisively moves above 25,000. On the lower side, support is placed at 24,600. A range-bound movement is expected until the Nifty breaks out of the 24,600–25,000 range," said De.
Sensex, Nifty Technical Levels To Watch
For the key technical levels of benchmarks Nifty 50 and Sensex, Shrikant Chouhan, Head Equity Research, Kotak Securities said that for the day traders now, 24,650/80,800 and 24,600/80,600 would act as a key support zones respectively.
"As long as market is trading above the same, the pullback formation is likely to continue. On the higher side market could move up to 25,000/81,900 and 25,050/82,200. On the other side, below 24,600/80,600 the sentiment could change. Below the same, traders may prefer to exit out from the trading long positions," said Chouhan.
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