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The Indian stock market is bracing for a potentially volatile day of trading following the announcement of tariffs by US President Donald Trump, which has sent ripples through global markets. The benchmark indices, Sensex and Nifty 50, are widely expected to open lower on Tuesday, mirroring the cautious sentiment prevailing in international markets. This anticipated downturn stems from concerns over the potential impact of the tariffs on global trade and economic growth, creating uncertainty for investors. The Gift Nifty, a key indicator of the Indian market's opening direction, is also pointing towards a negative start, further reinforcing expectations of a subdued trading session. The Gift Nifty was trading around the 25,495 level, a discount of approximately 44 points from the Nifty futures' previous close. This discrepancy highlights the prevailing bearish sentiment and suggests that investors are anticipating downward pressure on the Indian stock market. On Monday, the domestic equity market closed flat, reflecting a period of uncertainty surrounding the India-US trade deal. The Sensex edged up by a mere 9.61 points, or 0.01%, to settle at 83,442.50, while the Nifty 50 closed marginally higher by 0.30 points at 25,461.30. This lack of decisive movement underscores the cautious approach adopted by investors, who are keenly awaiting further clarity on the trade front. The prevailing sentiment is one of wait-and-see, with market participants reluctant to make significant moves until a clearer picture emerges regarding the potential fallout from the newly imposed tariffs. Several analysts have offered their insights on the expected market movements and trading strategies for the day. Shrikant Chouhan, Head of Equity Research at Kotak Securities, suggests that the Sensex is currently exhibiting indecisiveness, with both bulls and bears vying for control. He identifies 83,500 as a crucial breakout zone for traders. A move above this level could trigger a rally towards 83,700 – 84,000, while a break below 83,250 could lead to a quick intraday correction down to 83,000. Chouhan advises day traders to adopt a level-based trading strategy due to the current non-directional market texture. This approach involves identifying key support and resistance levels and making trading decisions based on these levels. The analyst suggests that a break above a resistance level could be a signal to buy, while a break below a support level could be a signal to sell. This strategy aims to capitalize on short-term price movements while mitigating the risk associated with longer-term positions in the current uncertain market environment.
In the derivatives segment, the Nifty open interest (OI) data reveals significant call writing at the 25,500 and 25,600 strike prices, indicating strong resistance around these levels. Conversely, the maximum put OI is concentrated at the 25,400 level, suggesting a potential support level. Mandar Bhojane, Technical Analyst at Choice Broking, interprets this setup as indicative of strong resistance around 25,500, while overall sentiment remains cautiously optimistic. He believes that a decisive close above this level will be crucial to sustaining any bullish momentum in the near term. The open interest (OI) data provides valuable insights into the prevailing market sentiment and can be used to identify potential support and resistance levels. Call writing, which involves selling call options, suggests that investors are expecting the price of the underlying asset (in this case, the Nifty 50) to remain below the strike price. Conversely, put writing, which involves selling put options, suggests that investors are expecting the price of the underlying asset to remain above the strike price. By analyzing the OI data, traders can gain a better understanding of the market's expectations and make more informed trading decisions. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, notes that the Nifty 50 has shifted into a narrow range movement and formed a doji-type candle pattern on the daily chart. He cautions that the predictability of this pattern could be limited due to its formation in a sideways range movement. A doji candle is characterized by a small body with long upper and lower shadows, indicating indecision in the market. It suggests that the buying and selling pressures are relatively balanced, resulting in a small price difference between the opening and closing prices. According to Shetti, the short-term trend of the Nifty 50 is choppy, but the near-term uptrend status remains intact. He identifies potential support around the 25,300 levels and resistance at 25,700. Dr. Praveen Dwarakanath, Vice President of Hedged.in, observes that the Nifty 50 formed a doji candle with a bigger shadow on the downside, suggesting underlying strength in the index. He recommends buying the Nifty 50 on dips, targeting levels near its immediate resistance at 25,800 - 26,200. Dwarakanath suggests that the momentum indicators in the smaller time frames are rising from the oversold region, indicating a potential upside from the current level. He acknowledges that the index may experience volatility due to the tariff-related news and the upcoming expiry of the 10th of July, but advises using any dips as an opportunity to go long.
VLA Ambala, Co-Founder of Stock Market Today, anticipates that the Nifty 50 will find support between 25,330 and 25,180, and encounter resistance between 25,510 and 25,630 in today's market session. This provides a more granular view of potential support and resistance levels, allowing traders to fine-tune their trading strategies. Moving on to the Bank Nifty, the index declined 82.70 points, or 0.15%, to close at 56,949.20 on Monday, forming a doji candle, signaling an extension of consolidation amid stock-specific action. Bajaj Broking Research expects the Bank Nifty index to continue consolidating within the range of 56,000 - 57,500 in the coming sessions. They suggest that only a move above 57,500 will unlock further upside potential towards 58,200 - 58,500 levels in the coming weeks. Key support is placed at the 56,000 – 55,500 region, representing a confluence of key technical indicators — including the 50-day EMA and the 61.8% Fibonacci retracement of the recent rally. This highlights the importance of this support zone and suggests that a break below this level could trigger a more significant correction. The research also suggests that PSU banking stocks are expected to continue outperforming the broader market, while the overall trend remains positive, and any dips should be viewed as buying opportunities. This provides a more specific focus for investors interested in the banking sector. Mandar Bhojane points out that the Bank Nifty formed a Gravestone Doji pattern, indicating increasing selling pressure. A Gravestone Doji is a bearish reversal pattern characterized by a long upper shadow and a small or non-existent lower shadow. It suggests that the price initially moved higher but was subsequently rejected by sellers, indicating a potential shift in momentum. Bhojane cautions that a sustained break below the key support level of 56,830 may lead to further downside towards 56,500 and 56,300. However, he suggests that if these levels hold and a reversal occurs, it could provide fresh buying opportunities. On the upside, resistance is expected around 57,100 – 57,200, with a breakout above this zone likely to trigger a rally toward 57,500. In conclusion, the Indian stock market faces a challenging day of trading due to the uncertainty surrounding the Trump tariffs announcement. While analysts provide varying perspectives and trading strategies, the prevailing sentiment is one of caution, with a focus on level-based trading and careful monitoring of key support and resistance levels.