 |
|
The Indian stock market is bracing for a potentially turbulent trading session on August 28th, following the implementation of additional US tariffs on Indian exports. The benchmark indices, Sensex and Nifty 50, are widely expected to open lower, reflecting the negative sentiment stemming from the increased trade barriers. This move by the United States raises concerns about the impact on Indian businesses and the overall economic outlook. The cumulative tariff imposed by the US on India now stands at a significant 50%, representing a substantial impediment to trade relations between the two countries. This escalating trade tension has cast a shadow over the Indian market, prompting investors to adopt a cautious approach. Market analysts and experts are closely monitoring the situation, assessing the potential ramifications of these tariffs on various sectors of the Indian economy. The extent and duration of this downward pressure will depend on various factors, including the government's response, corporate strategies to mitigate the impact, and global market conditions. The situation warrants careful consideration and a well-defined risk management strategy for investors navigating this period of uncertainty. The Gift Nifty, an indicator of the Indian market's opening direction, also suggests a weak start for the benchmark indices. Trading around the 24,665 level, it reflects a discount of nearly 66 points from the Nifty futures' previous close. This further reinforces the expectation of a negative opening for the Indian market. The discount in Gift Nifty indicates that traders are anticipating a decline in the Indian market. Indian markets were closed on Wednesday, August 26th, due to the Ganesh Chaturthi festival. This break may have provided investors with time to assess the situation and react to the US tariff news when trading resumes. The prior trading day, Tuesday, saw the domestic equity market closing lower, with the benchmark Nifty 50 falling below the 24,800 level. The Sensex experienced a significant decline of 849.37 points, or 1.04%, closing at 80,786.54, while the Nifty 50 settled 255.70 points, or 1.02%, lower at 24,712.05. This negative performance highlights the existing bearish sentiment prevalent in the market ahead of the tariff implementation. Technical analysts are closely examining these movements and using various indicators to predict future trends and potential support and resistance levels. The convergence of negative global cues and weak domestic market performance emphasizes the need for investors to remain vigilant and exercise caution. The combined effect of these factors paints a pessimistic picture for the short-term outlook of the Indian stock market.
Predictions and analyses from market experts offer insights into what to expect from Sensex, Nifty 50, and Bank Nifty today. Shrikant Chouhan, Head Equity Research at Kotak Securities, noted that Sensex formed a long bearish candle on the daily charts and is holding a lower top formation on intraday charts, which is largely negative. He believes the intraday market texture is weak, but a fresh selloff is possible only after the dismissal of the 80,500 level. Below this level, Sensex could retest the levels of 80,200 - 80,000. On the flip side, above the 20-day SMA or 81,000, a pullback move is likely to continue up to 81,300 - 81,500. These levels provide important reference points for traders to gauge potential support and resistance areas. The ability of the Sensex to hold above 80,500 will be crucial in determining whether the downward trend continues. An analysis of Nifty Open Interest (OI) data reveals that the highest Call Open Interest was observed at the 24,800 strike, while the highest Put Open Interest was concentrated at the 24,500 strike. Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking, believes this setup suggests that resistance remains firm near 24,800, and a sustained close above this level will be crucial to revive bullish momentum. This analysis highlights the importance of the 24,800 level as a significant resistance point for the Nifty. The strength of the market will depend on its ability to overcome this hurdle. Nifty 50 formed a big bearish candle on the daily chart and broke below the 50-DEMA support at 24,840, indicating fresh weakness. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, observed that a long bear candle was formed on the daily chart after a minor bounce from the previous session. This market action indicates strong selling pressure that emerged from the lower top of 25,150 levels. The previous opening upside gap of August 18th has been pierced on the downside, and Nifty 50 was unable to show any recovery from near the gap support of around 24,700. This suggests the underlying short-term trend of Nifty 50 is weak, with the next lower supports to watch around 24,600 followed by 24,400 levels. However, any sustainable bounce back above 24,900 could open more short covering for the near term. These observations reinforce the bearish outlook and provide potential support and resistance levels for traders to consider.
Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities, noted that the Nifty 50 index slipped below both its 20-day and 50-day EMA, signaling a weakening of near-term momentum. This breakdown below key moving averages reflects growing bearish sentiment and a potential shift in trend dynamics. The RSI on the daily chart has triggered a bearish crossover, further reinforcing the downside bias. A bearish RSI crossover typically suggests that selling pressure is intensifying and that the index may struggle to regain upward momentum in the immediate term. He believes the 100-day EMA zone of 24,640 - 24,600 will act as immediate support for the Nifty 50 index, and any sustainable move below the level of 24,600 will lead to further correction up to the 24,400 level. On the upside, the 20-day and 50-day EMA zone of 24,830 - 24,850 will act as a crucial hurdle for the index. These technical indicators provide additional confirmation of the bearish trend and offer insights into potential support and resistance levels. Dr. Praveen Dwarakanath, Vice President of Hedged.in, mentioned that the momentum indicators have come into the oversold region, which could pose a reason for a bounce from the support level. He noted that the Nifty 50 index filled the gap formed on its way up due to the GST news on August 18th. The tariff on India by the US is to be implemented on August 27th, which can be the reason for the fall. Any change in tariff can push the markets on the upside. This suggests that a potential reversal is possible if the oversold conditions lead to a bounce and if there are any changes in the tariff situation. The Bank Nifty index slipped 688.85 points, or 1.25%, to close at 54,450.45 on Tuesday, forming a large bearish candle, confirming strong selling pressure at higher levels. Hrishikesh Yedve, AVP Technical and Derivative Research, Asit C. Mehta Investment Intermediates Ltd., observed that the Bank Nifty index broke below the 100-DEMA support as well as the multiple demand zone at 54,900, leading to a head-and-shoulders pattern breakdown and the formation of a big bearish candle on the daily scale. The next key support for Bank Nifty is placed near 53,570, where its 200-DEMA is located. Hence, traders are advised to follow a sell-on-bounce approach in the short term. These observations indicate a significant downward trend in the Bank Nifty index and suggest a cautious approach for traders.
Om Mehra, Technical Research Analyst at SAMCO Securities, highlighted that on the daily chart, the Bank Nifty index has broken below the midline of the Donchian Channel and is now testing the lower band of the channel. The breakdown has brought the index close to its recent swing low of 54,905, which failed to hold as support. A further slip could expose the index to 54,000 or deeper. The Bank Nifty index is trading well below all major moving averages, except the 200-SMA. The RSI has dropped to 33, slipping closer to the oversold territory, while the MACD remains in negative territory. He believes the broader trend may stay fragile as the index is unable to sustain above key short-term averages. Support is now placed at 54,000, followed by 53,800, while resistance is capped at 55,000. A mean reversion cannot be ruled out, but a sell-on-rise approach would be preferable for the coming sessions. This analysis provides further confirmation of the bearish trend in the Bank Nifty index and offers potential support and resistance levels for traders to consider. In conclusion, the Indian stock market is facing downward pressure due to the newly implemented US tariffs and other factors. Technical analysis from various experts suggests a bearish outlook for both Sensex and Nifty 50, with key support and resistance levels identified. Investors are advised to exercise caution and closely monitor market movements, as well as any potential changes in the tariff situation. A sell-on-bounce approach may be prudent in the short term, given the current market conditions. The convergence of negative global cues, weak domestic market performance, and bearish technical indicators emphasizes the need for a well-defined risk management strategy and a cautious approach to investing in the Indian stock market at this time. The potential for a reversal exists, but the overall trend suggests that the market is likely to remain volatile and under pressure in the near term. Therefore, investors should carefully assess their risk tolerance and make informed decisions based on their individual circumstances and investment goals.