Market Sentiment: Indian stock market indices, the Nifty 50 and Sensex, are expected to start the day with a tepid opening due to mixed global cues. Gift Nifty trends also suggest a flat start, with Gift Nifty trading around 18,975 compared to the previous close of Nifty futures at 18,965.
Recent Performance: The domestic equity indices have been on a losing streak for six consecutive sessions, with Nifty 50 hitting a 200-day EMA for the first time since April. On Thursday, Sensex plummeted 900.91 points to 63,148.15, and Nifty 50 declined by 264.90 points (1.39%) to close at 18,857.25. Nifty 50’s daily chart displayed a long bear candle with a gap-down opening.
READ what is SENSEX and NIFTY 50: Understanding India’s Stock Market Indices: Nifty 50, Nifty Bank, Nifty Sensex, and More
Technical Analysis: Nagaraj Shetti, Technical Research Analyst at HDFC Securities, observes three consecutive long bear candles, indicating a bearish “three black crows” pattern, suggesting a continuation of the downtrend in the short term. Nifty 50 is currently supported by the 200-day EMA, but there’s no clear reversal pattern at the current lows. The negative pattern of lower tops and bottoms on the daily chart persists, with no signs of a bottom formation.
Short-Term Trend: Shetti believes that the short-term trend for Nifty 50 remains negative. However, the market has moved into the oversold region, leaving room for a potential upside bounce.
Nifty 50 Outlook:
- Nifty 50 has fallen below 19,000 for the first time in four months, indicating a bearish trend.
- A bearish crossover in the momentum indicator supports the negative momentum.
- Support levels are fragile, with lower-end support at 18,600-18,645 and resistance at 18,950-19,000, according to Rupak De, Senior Technical Analyst at LKP Securities.
Know what is support and resistance: Understanding Support and Resistance in Trading: Key Concepts for Success
Bank Nifty Analysis:
- The Bank Nifty index has seen continued heavy selling for the third consecutive session, ending 552 points (1.29%) lower at 42,280 on Thursday.
- It’s currently trading below its 200-day Exponential Moving Average (200EMA), maintaining a bearish tone.
- Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, sees immediate support at 42,000 with fresh put writing. A breach below this level could lead to further declines, potentially targeting the 41,500-41,200 range.
Indian Stock Market Update: FIIs Sell, DIIs Buy as Nifty 50 Declines
Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs): On October 26, Foreign Institutional Investors (FIIs) continued their selling spree in Indian stocks, extending losses for the sixth consecutive session. However, Domestic Institutional Investors (DIIs) emerged as net buyers, injecting INR 6,558 crore into Indian equities.
FIIs and DIIs Transactions: According to NSE data, FIIs collectively bought INR 10,239.05 crore worth of Indian equities but sold INR 17,941.58 crore, resulting in a net outflow of INR 7,702.53 crore on that day. In contrast, DIIs infused INR 13,600.71 crore into the market while offloading INR 7,042.26 crore, leading to a net inflow of INR 6,558.45 crore.
Reasons for FIIs Selling: FIIs have been selling Indian equities amidst the backdrop of rising US bond yields and the strength of the dollar index, which has been impacting market sentiment. The ongoing West Asia conflict, economic uncertainties, and concerns about potential rate hikes have contributed to the bearish sentiment.
Market Performance: Nifty 50 closed with a significant loss of 265 points (1.39%) at 18,857.25, and the Sensex closed at 63,148.15, down 901 points (1.41%). Mid and small-cap stocks also saw losses, though of a lesser magnitude. The BSE Midcap index ended 1.06% lower, while the Smallcap index declined by 0.32%. Over the last six sessions, both Nifty 50 and Sensex have seen a decline of about 5%, and the total market capitalization of BSE-listed firms has fallen from nearly INR 323.8 lakh crore to around INR 306 lakh crore.
Analyst’s View: The Q2 results in the domestic market have fallen short of expectations, and similar disappointments have been observed in developed economies. Analysts attribute the downgrading of earnings and valuations to risks like geopolitical instability and elevated interest rates. Expiry-led volatility has added to selling pressure and made investors more cautious.
The official website of NSE: https://www.nseindia.com/
Market Outlook: Tensions in the Middle East, coupled with US Treasury yields at around 5%, have contributed to a risk-off sentiment. Mixed Q2 results, ongoing FIIs selling, rising oil prices, and a near-record high USDINR exchange rate have further weighed on investor sentiments. In this uncertain global environment, analysts suggest higher volatility in the near term, providing long-term investors with opportunities to accumulate quality stocks at lower levels, with an emphasis on large-cap stocks due to comfortable valuations and steady growth prospects.
Technical View: The Nifty slipping below 19,000 indicates a rising bearish condition. A bearish momentum crossover and fragile support levels suggest the possibility of further correction from the current levels, with support at 18,600-18,645 and resistance at 18,950-19,000.
Please note that market conditions are subject to change, and it’s essential to consider the latest news and consult with financial advisors for investment decisions.