The Indian stock market extended its losses for the fourth consecutive trading session on Tuesday, with benchmark indices Sensex and Nifty 50 falling more than 1% each amid continued cautious investor sentiment.
The 30-share BSE Sensex plunged 1,024.97 points, or 1.35%, to trade at 74,990.31, while the 50-share NSE Nifty 50 was down by 289.25 points, or 1.21%, at 23,526.60. Over the last four sessions, the Sensex crashed more than 2,800 points, or over 3%, while the Nifty 50 has slipped below the crucial support level of 23,800.
The sell-off in the Indian stock market has been driven by concerns over the economic impact of persistently elevated crude oil prices amid the prolonged US-Iran war in the Middle East. Uncertainty surrounding a potential US-Iran peace deal has further kept investors on edge.
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The Nifty 50 index is approaching key support levels near 23,400, which aligns with the 50% retracement of the recent rally. Following this, the 23,100 zone, representing the 61.8% Fibonacci retracement level, is also a significant support area.
The sell-off is driven by concerns over the economic impact of elevated crude oil prices due to the US-Iran war and uncertainty surrounding a potential peace deal. Prime Minister Narendra Modi’s remarks urging reduced consumption of certain goods also heightened market fears.
The Nifty 50 has broken below the crucial 23,800 – 24,300 consolidation range, indicating a weakening short-term structure and a shift in momentum towards the bears. A decisive breach below 23,550 could further confirm this breakdown.
Options data shows put writing concentrated at the 23,800 and 23,600 levels, suggesting these as potential support zones. Significant call writing was observed at the 23,900 and 24,000 strikes, indicating resistance in that range.
While the market outlook is hazy with potential for further downside, some analysts suggest a balanced strategy. Instead of holding all cash, investors can look for shorting opportunities on the index front or selectively buy strong stocks in sectors like pharma and healthcare.
Selling pressure intensified after Prime Minister Narendra Modi urged citizens to reduce consumption of petrol, diesel, gold, chemical fertilisers, and edible oil, while also avoiding non-essential foreign travel. The remarks were viewed as part of a broader crisis management response to rising current account deficit concerns triggered by high crude oil prices amid the US-Iran war.
The comments heightened market fears and sparked panic selling. The Nifty 50 breached the key support levels of 23,800 and later slipped below 23,600 during Tuesday’s session.
“The Nifty’s gap-down opening and subsequent breach of the 23,800 level have heightened near-term concerns in the market, amid escalating geopolitical tensions, a sharp rise in crude oil prices, and continued weakness in the Indian rupee,” said Ruchit Jain, Head, Equity Technical Research, Wealth Management, Motilal Oswal Financial Services.
Here’s what analysts expect next.
Next key levels for Nifty 50
Nifty 50 slipped below the crucial 23,800 support zone, indicating continued weakness in near-term market sentiment.
Despite the pressure, Ruchit Jain believes the ongoing decline is still being viewed as a corrective pullback within the broader uptrend rather than the beginning of a bear market.
“From a technical perspective, the Nifty 50 index is approaching key support levels near 23,400, which coincides with the 50% retracement of the recent rally, followed by the 23,100 zone, representing the 61.8% Fibonacci retracement level. These levels are likely to act as important demand zones for the market in the near term,” said Jain.
Anshul Jain, Head of Research at Lakshmishree Investments highlighted that the Nifty 50 index has broken below the crucial 23,800 – 24,300 consolidation range, indicating weakening short-term structure and a shift in momentum toward the bears.
“The breakdown suggests supply dominance after prolonged range-bound trade, with price now gravitating toward the next key liquidity zone near 23,550, which acts as immediate support. Market breadth and price action indicate caution, as failure to reclaim the broken range could invite further downside pressure,” said Jain.
According to him, a decisive breach below 23,550 would confirm continuation of the breakdown and expose the Nifty 50 index to the 23,200 zone, which coincides with the lower end of the previous bullish gap area.
“Sustaining below these levels would weaken the broader bullish structure further,” said Anshul Jain.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
