Technical View: Indices end in red; Nifty weakens, Further selling likely if 24,800 breached

Stock market trend

Indian benchmark equity indices ended Wednesday's volatile session in the red, dragged down by losses in auto, metal, and banking stocks.

The BSE Sensex, consisting of 30 stocks, dropped 398 points, or 0.49 percent, to close at 81,523, while the broader NSE Nifty fell 122 points, or 0.49 percent, to finish at 24,918. The total market capitalization of all listed companies on the BSE declined by Rs 2.47 lakh crore, settling at Rs 461.02 lakh crore.

Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd, stated: "Technically, on the daily scale, Nifty failed to hold above the trend line resistance and formed a red candle, indicating weakness. As long as the index remains below the trend line resistance, around the 25,150 level, caution is advised on the upside. On the downside, 34-DEMA support is positioned around 24,750, providing crucial support for Nifty in the short term."

Shrikant Chouhan, Head of Equity Research at Kotak Securities, added: "After a muted opening, the market once again met resistance near the 25,100 mark and reversed sharply. The daily charts show a small bearish candle, and the intraday charts reveal a lower top formation, suggesting temporary weakness."

"We believe the current market sentiment is weak, but further selling pressure may emerge only after a break below the 20-day SMA or under the 24,800/81,400 level. If this occurs, the index could drop to 24,775-24,725/81,000-80,800. On the upside, 25,000/81,800 remains key for the bulls. A move above these levels could lead to a bounce towards 25,100-25,150/82,150-82,500," Chouhan explained.

Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, highlighted that investor concerns have been fueled by slowdown fears in China and falling crude oil prices. All eyes are on the key US inflation data set to be released on Friday, which could offer insights into the Federal Reserve’s potential interest rate decisions in its upcoming policy meeting.

"Technically, if Nifty slips below the 24,753 mark, the downside risk is projected at 24,441, while the index will face resistance only above its all-time high of 25,333.65," Tapse noted.

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