Indian markets opened gap-down on Thursday, driven by weak global sentiment amid escalating geopolitical tensions and disappointing domestic data. Analysts expect NSE Nifty 50 to witness volatility in the near term, with 25,000 to act as a support level.
The market breached the important support of 20-day SMA, post which the selling pressure intensified, indicating continued weakness with 25,500 to act as immediate resistance. Hardik Metalia, derivative analyst at Choice Broking, added that a break below the support level could trigger further downside, while resistance at 25,500 may cap any short-term recovery attempts.
"A bearish candle on daily charts and correction continuation formation on intraday charts indicating further weakness from the current levels," said Shrikant Chouhan, head equity research, Kotak Securities. Chouhan also added that one quick technical pullback is likely if the market succeeds to trade above 22,365 levels.
In addition, the volatility index, INDIA VIX, surged by 9.86% and settled at 13.17, indicating a rise in market volatility.
Bank Nifty also opened on a negative note and remained under pressure throughout the day. The index has formed a large red candle on the daily chart, indicating weakness, according to Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit. C. Mehta Investment Intermediates Ltd. On the downside, support for Bank Nifty will be placed at 50,990, he added.
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Market Recap
The NSE Nifty 50 and BSE Sensex experienced their worst session since Aug. 5, following the Securities and Exchange Board's announcement of new restrictions on futures and options trading, which dampened investor risk appetite. Major players like Reliance Industries Ltd. and HDFC Bank Ltd. contributed to the decline in the Nifty 50 index.
The Nifty 50 closed down 546.80 points, or 2.12%, at 25,250.10, while the Sensex fell 1,769.19 points, or 2.10%, ending at 82,497.10.
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Money Market
The Indian rupee closed lower on Thursday, driven by increased demand for the US dollar amid escalating geopolitical tensions in the Middle East and a slowdown in the country’s manufacturing sector in September.
Foreign institutional investors, concerned by these developments, withdrew Rs 5,579 crore from Indian markets, exacerbating the rupee’s downtrend.
The Indian currency depreciated 15 paise to close at Rs 83.97 against the US dollar. It had closed at Rs 83.82 on Tuesday, according to Bloomberg data.
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