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The Indian equity market experienced a significant downturn on Friday, primarily driven by escalating tensions between India and Pakistan. The Nifty 50 index plummeted 338 points at the open, reflecting investor anxiety surrounding the geopolitical uncertainty. Throughout the trading session, the Nifty traded within a limited 200-point range, indicating a degree of consolidation after the initial shock. The Sensex mirrored this weakness, with both indices ultimately closing around 1% lower. The Nifty concluded the day at 24,009, down 266 points,amid heightened volatility. This decline marked a reversal of the previous three-week gaining streak for the Indian market, highlighting the sensitivity of investor sentiment to geopolitical events. The negative impact was particularly pronounced in the banking sector, with selling pressure in banking stocks dragging the Nifty Bank down by 1.4%. ICICI Bank emerged as the top Nifty loser, significantly impacting both the Nifty and Nifty Bank indices. Other heavyweight stocks, including Reliance Industries and HDFC Bank, also experienced losses of approximately 2% each, contributing to the overall market decline. However, amidst the prevailing bearish sentiment, broader indices demonstrated resilience. The Midcap index closed flat, recovering nearly 2% from its intraday low, suggesting underlying strength in mid-sized companies. This divergence between the broader market and the headline indices indicates a nuanced market dynamic, with specific sectors and stocks exhibiting greater resistance to the negative sentiment. The week's performance further underscores the market's vulnerability to geopolitical risks. The Sensex, Nifty, and Midcap Index each fell by 1%, while the Nifty Bank experienced a more substantial decline of 3%. Nearly 40 of the Nifty stocks delivered negative returns during the week, with Asian Paints, Sun Pharma, Jio Financial, IndusInd Bank, and NTPC among the top losers. These figures highlight the widespread impact of the India-Pakistan tensions on the Indian equity market.
Despite the overall market weakness, certain stocks managed to buck the trend. Titan emerged as the top Nifty gainer, soaring 4% on the back of better-than-expected Q4 earnings. This positive performance underscores the importance of company-specific factors in driving stock prices, even amidst broader market turbulence. Shares of ideaForge Technologies and Zen Technologies also experienced significant gains, surging up to 14% and 5%, respectively, as the crisis between India and Pakistan intensified. This surge likely reflects increased investor interest in companies involved in defense and security-related technologies, as geopolitical tensions often lead to increased defense spending and demand for such products and services. Looking ahead, market participants will be closely monitoring upcoming earnings reports from a diverse range of companies, including PVR INOX, SRF, Tata Steel, UPL, Jyothy Labs, Ather Energy, Happiest Minds Technologies, Raymond, Bajaj Electricals, and Zaggle Prepaid Ocean Services. These earnings releases will provide valuable insights into the performance of various sectors and individual companies, potentially influencing market sentiment and investment decisions. Additionally, stocks such as Dr Reddy's Laboratories, Trent, Manappuram Finance, Swiggy, Navin Fluorine, and Bank of India will also be in focus, as these companies reported their Q4 numbers after market hours on Friday. The market's reaction to these post-market earnings announcements will be closely watched. Foreign investors were net sellers in the cash market on Friday, while domestic investors were net buyers, indicating a divergence in investment strategies and perspectives. This difference in opinion could contribute to market volatility in the short term.
Technical analysis provides further insights into potential market movements. Nagaraj Shetti of HDFC Securities suggests that geopolitical tensions between India and Pakistan are significantly impacting the market. He believes that further weakness could find strong support around the 23,800-23,600 levels, potentially leading to an upside bounce. He identifies the immediate resistance level at 24,200. Rupak De of LKP Securities anticipates that bears may attempt to push the index decisively below 24,000. A clear break below 23,900 could increase bearish bets, while a move above the immediate resistance level of 24,250 could improve market sentiment. Rajesh Bhosale of Angel One notes that the previous breakout level of around 23,800 now serves as a key support level. A breach of this level could trigger further downside, with the next major support zone between 23,600 and 23,500. On the upside, immediate resistance lies between 24,250 and 24,300. The Nifty Bank ended Friday's session at 53,595.25, registering a decline of 1.42% and slipping below both the 9-day and 20-day EMAs. For the week, the Nifty Bank declined by 2.76%. Om Mehra of SAMCO Securities suggests that the momentum is likely to remain skewed to the downside unless the index recovers the 55,000 mark. However, a sustained hold above 54,600 could act as a springboard for the index to resume its upward trajectory in the coming sessions. In other news, Sumitomo Mitsui Banking Corporation will acquire a 20% stake in a Mumbai-based private lender from State Bank of India (SBI) and a consortium of lenders. Several companies reported their March quarter results, including Persistent Systems, Tata Communications, CE Info Systems, and Tata Elxsi. NTPC Green Energy Limited announced the appointment of Sarit Maheshwari as Chief Executive Officer, and Lifestyle reported that Sameer Shah resigned as Chief Financial Officer.
Source: Trade Setup for May 12: Nifty set to react to India-Pakistan halting military action