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The Indian stock market experienced a significant rebound on Monday, ending an eight-session losing streak. This recovery, primarily driven by a surge in banking stocks, saw the BSE Sensex climb back towards 76,000 and the Nifty 50 surpass 22,900. While the initial trading hours witnessed continued selling pressure, mid-session buying propelled the indices to close slightly higher. This positive movement, however, comes amidst a backdrop of mixed global signals, persistent foreign institutional investor (FII) selling, concerns surrounding US trade tariffs, and weaker-than-expected quarterly earnings. The Q3 earnings season showcased a higher number of downgrades compared to upgrades, indicating a challenging business environment for many companies. Weakness in consumption, coupled with a drag from commodities, further exerted pressure on overall earnings, despite healthy performances from sectors like BFSI (Banking, Financial Services, and Insurance), Healthcare, Capital Goods, and Technology.
Market analysts offer varied perspectives on the future trajectory of the Indian indices. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, notes a cautious market sentiment despite the rebound. While the broader market indices also closed in the green, with Nifty Midcap100 and Smallcap100 showing marginal gains, the overall outlook remains uncertain due to the persistent headwinds mentioned above. In contrast, Mandar Bhojane, Research Analyst at Choice Broking, suggests that the selling pressure might be easing, based on the observed price action and technical indicators. However, he emphasizes that the continuation of the correction depends on key support and resistance levels. He highlights that while indicators like RSI and Stochastic RSI suggest a potential recovery, a strong close above 23,200 is crucial to confirm a bullish reversal. Failure to sustain above 22,800 could lead to further declines towards 22,600 and 22,400.
Rajesh Bhosale, Technical Analyst at Angel One, offers a more optimistic, yet cautious, assessment. He points to strong support levels at 100-point intervals, ranging from 22,800-22,700 to 22,600-22,500. These support levels coincide with a significant retracement point of the early February rebound. Bhosale advises against panic selling and discourages new short positions. He suggests that any dips could present opportunities for accumulating quality stocks in a phased manner. While acknowledging the uncertain market conditions, he suggests that a recovery is possible in the near term. He identifies immediate resistance at 23,250, aligning with the 20-day EMA and the intraday high on the hourly chart, with a further critical hurdle at the upper boundary of the Falling Wedge near 23,400. He urges traders to closely monitor these levels and adapt their trading strategies accordingly. The diverse opinions underscore the inherent uncertainty and volatility within the market, highlighting the need for a careful, informed approach by investors.
The current market situation presents a complex scenario for investors. While a rebound has occurred, the underlying factors that contributed to the eight-day decline remain present. The mixed global signals, FII selling, and concerns about the US trade tariffs continue to cast a shadow of uncertainty. The weaker-than-expected Q3 earnings further add to the complexity. The divergence in expert opinions underscores the need for investors to carefully consider their risk tolerance and investment strategy. While some analysts suggest that the correction might be ending, others remain cautious and advocate for a wait-and-see approach. The technical indicators, while offering some insights, should not be interpreted in isolation but rather in conjunction with fundamental analysis and a thorough understanding of the broader economic and geopolitical landscape. The advice to avoid panic selling and refrain from impulsive trading decisions resonates across all viewpoints, emphasizing the need for rational decision-making and a long-term perspective.
Source: Stock market bottom: Is correction in Nifty 50, Sensex over or more pain left? Experts weigh in