The Indian benchmark equity indices staged a bounceback after opening with a downside gap on Tuesday, aided by the IT sector and software rally.
However, target price cuts and downgrades by brokerages have led to a global tech selloff, signalling weakness for the Indian IT sector as ADRs of Wipro and Infosys plunged sharply.
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"Going ahead, the sustainability of this (tuesday's) move will depend on a decisive follow-through on the upside," said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.
Analysts at Bajaj Broking research also reiterated this view and said in the coming sessions a follow through strength above Tuesday's high 23,556.95 will open further upside.
As of 11:15 p.m. the GIFT Nifty hinted at a gap down open for the equity benchmark, as it traded 0.46% lower at 23,471.
In case of a near-term weakness, the 23,400–23,370 zone is likely to serve as a crucial support area, providing a cushion to Nifty. While on the flipside, 23,620–23,650 zone is expected to act as an key resistance for the index.
Bank Nifty
The Nifty Bank could mirror the benchmark's rebound only to a certain extent and closed on a flat note.
"Notably, Bank Nifty continues to trade below its key moving averages, indicating a cautious undertone in the near-term trend," said Shah from SBI Securities.
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Going ahead, the 54,200–54,300 zone is expected to act as an immediate hurdle for the index. Whereas, the 53500–53400 zone will serve as a crucial support area. A breach below 53,400 may drag the index towards the next important support level placed around 52,800.
Market Recap
Indian equity benchmarks halted a four-day losing streak. The NSE Nifty 50 rose 0.43% to close at 23,483.55, while the BSE Sensex gained 0.52% to end at 74,649.84.
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