Indian blue-chip equity indices took a sharp nosedive on Monday, with the NSE Nifty 50 index falling 2.68% to 24,055 and the S&P BSE Sensex declining 2.74% to 78,759. This marked their steepest drop in two months, driven by a global sell-off sparked by fears of a U.S. recession. The market pulse was read by analysts, who provided insights into the current situation and potential future trends.
Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty slipped back into the rising channel on the daily time frame due to heavy selling. The index found initial support at the 50EMA before closing slightly higher. The RSI is in a bearish crossover and falling, indicating weak sentiment in the short term. Support levels are seen at 23,900 and 23,700, with resistance at 24,200 and 24,500. Hrishikesh Yedve of Asit C. Mehta Investment highlighted that a strong break below 24,000 could trigger further selling pressure, with support levels at 23,300 and 23,000.
The global sell-off was evident in the U.S. market, with the S&P 500 down 2.4% and the Dow Jones Industrial Average plunging 2.2%. Japan’s Nikkei 225 experienced its worst day since the Black Monday crash of 1987, leading the slide. European stock markets also fell more than 2%, with the STOXX 600 closing 2.2% lower. The Euro STOXX volatility index surged to its highest level since March 2022, reflecting investor anxiety.
Technical indicators for the Nifty suggested a long bear candle on the daily chart, with the index ending below its 20-DMA. The short-term trend was sharply down, with the next downside support around 23,625. Open Interest data showed concentration at the 24,300 and 24,400 strike prices on the call side and at the 24,000 strike price on the put side.
Momentum indicator Moving Average Convergence Divergence (MACD) signaled bullish trade on counters like Dhanuka Agritech and Hatsun Agro Products, while bearish signs were seen on BASF India and Coforge. Most active stocks in value terms included Zomato, HDFC Bank, and Tata Motors, while Vodafone Idea and YES Bank were among the most traded stocks in volume terms.
Stocks like Dr Lal PathLabs and Ajanta Pharma witnessed strong buying interest, reaching fresh 52-week highs, while Equitas Small Finance Bank and IDFC hit their 52-week lows, signaling bearish sentiment. Overall, market breadth favored bears, with 3,446 stocks ending in the red and 638 settling in the green.
In conclusion, the Indian equity market faced significant challenges on Monday, reflecting broader global concerns. Analysts provided insights into potential support and resistance levels, as well as indicators of bullish and bearish sentiment in specific stocks. Investors will need to closely monitor market developments and adapt their strategies accordingly to navigate the current volatile environment.