Indian stock market indices, including the Nifty 50 and Sensex, are likely to open on a negative note on Friday, January 10, 2025, as global cues and domestic market conditions remain unfavorable. The trends on the GIFT Nifty, which tracks Indian market sentiment, also suggest a weak start, with the index trading at 23,583, indicating a discount of nearly 63 points compared to the previous Nifty futures close.
Market Overview: Nifty and Sensex Under Pressure
The Indian stock market struggled in the previous trading session, with both benchmark indices ending in the red. On Thursday, the Sensex fell 528.28 points, or 0.68%, closing at 77,620.21, while the Nifty 50 dropped 162.45 points, or 0.69%, to settle at 23,526.50.
Nifty 50’s weakness was evident, forming a long negative candlestick pattern on the daily chart after a hammer-type candlestick the day before. According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, this suggests a potential continuation of the downtrend. Nifty 50’s breach of the 23,500 support level could trigger further downside, with the next support around 23,260.
Key Technical Levels to Watch
Nifty’s immediate support lies at the 23,500 mark, with resistance at 23,700. A decisive break below 23,500 could confirm a bearish outlook, while holding this level could lead to a period of consolidation. Technical analysts are keeping a close eye on these levels, as they will likely determine the market’s near-term direction.
Open interest (OI) data shows strong resistance at the 23,700 and 23,800 levels on the call side, while support is seen at 23,500 and 23,200 on the put side. This indicates a range-bound market in the short term, with traders focusing on these key levels.
Bearish Sentiment: FII Outflows and Global Pressures
The weakness in Indian equities is compounded by a combination of global and domestic factors. Rising US dollar strength and higher bond yields have dampened investor sentiment, while the ongoing selling by foreign institutional investors (FIIs) continues to weigh on the market. Yesterday, FIIs pulled out ₹7,170 crore from Indian stocks, adding to the pressure on the indices.
The Nifty 50’s failure to maintain support at 23,500, as pointed out by Dr. Praveen Dwarakanath, Vice President at Hedged.in, is a concerning sign. With momentum indicators showing reduced upside potential, there is a risk that the index may continue to face downward pressure in the coming days.
Strategy for Investors
In light of these developments, analysts recommend a cautious approach for investors. VLA Ambala, Co-Founder of Stock Market Today, suggests that Nifty is nearing a significant support zone between 23,460 and 23,370. However, with the index already about 5% below its 20-month Exponential Moving Average (EMA), further declines could be possible. He advises investors to consider accumulating value stocks during this dip, which may outperform the broader market once the volatility subsides.
Bank Nifty Outlook: Weakness Persisting
Bank Nifty also ended lower on Thursday, falling by 331.55 points or 0.67%, closing at 49,503.50. The index formed a bearish candlestick pattern, signaling ongoing weakness. The failure of Bank Nifty to hold above the 49,500 support level, along with a rejection at the 50,000 mark, indicates continued bearish momentum. Dr. Dwarakanath suggests using any potential bounces in the index as selling opportunities until it convincingly breaks the 50,000 level.
Conclusion
With market conditions pointing to continued weakness, both Nifty 50 and Bank Nifty are expected to face further pressure. Investors should remain cautious, monitor key support and resistance levels, and look for stock-specific opportunities, particularly in sectors that may offer resilience during volatile times.
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