Nifty 50 outlook: The Indian stock market witnessed a broad-based sell-off in Tuesday’s session, December 16, as the relentless fall in the Indian rupee began to pinch the equity market, keeping overall sentiment fragile despite strong domestic fundamentals.
The Nifty 50 got off to a weak start following tepid global cues, and the sell-off intensified as the day progressed, leaving no chance for the index to attempt a rebound. The 50-pack Nifty closed the session at the day’s low of 25,860, down 0.64% from the previous close, marking the second straight session of decline.
Although domestic triggers remain in favour of bulls, the rupee slide, sustained selling by foreign portfolio investors, and uncertainty over a trade deal with the US are pressuring the market and limiting the continuation of the rally that began in August.
The Indian rupee breached the 91 mark against the US dollar for the first time in today’s trade, registering another historic low of 91.07. This fall comes even as the country’s trade deficit declined to a five-month low.
With today’s fall, the currency has lost over 6% of its value against the US dollar, emerging as the worst-performing Asian currency. However, a weaker rupee can benefit companies that earn a large share of revenue overseas, particularly technology exporters.
The Nifty IT index has climbed about 14% since the end of September, coinciding with the period in which rupee losses deepened.
Can Nifty crash to 25,700 levels in near term?
Nilesh Jain, Head of Technical and Derivatives Research (Equity Research), Centrum Broking, said, “Markets stayed under pressure amid weak global cues, with the Nifty encountering resistance near the 26,000 mark. The index closed below 25,900, while momentum indicators showed continued weakness as the RSI maintained a lower-top, lower-bottom formation and slipped below the 50 level.”
Overall, the trend appears sideways. Immediate support is seen at the 50-DMA around 25,790, and he notes that a decisive break below this level could lead to further downside toward 25,700. On the upside, a sustained move above the short-term 21-DMA at 26,030 would be crucial to trigger a pullback, potentially paving the way for a rise toward 26,250.
Shrikant Chouhan, Head of Equity Research, Kotak Securities, noted that a fresh sell-off is possible only after the dismissal of 25,800. Below this level, the market could retest 25,700–25,650. On the flip side, he sees 25,920 as the immediate resistance zone for day traders. If it succeeds in trading above this level, it could bounce back to 26,050–26,100.
Rupak De, Senior Technical Analyst at LKP Securities, emphasised that the day favoured the bears as the Nifty remained below the key 200-SMA on the hourly chart throughout the session.
Additionally, the index failed to retest the morning high, indicating complete control by the bears. On the downside, he noted that support at 25,870 was breached, intensifying bearish sentiment in the market. “In the short term, the index may drift lower toward 25,700 and below. On the upside, the 25,950–26,000 zone is likely to act as crucial resistance in the near term,” he added.
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