The Indian stock market closed in the green, with Sensex and Nifty rising up to 0.4% on Friday a day after the sharp crash that wiped off a significant portion of investors’ wealth.
Sensex rose 315 points to end Friday’s session at 73,896 while Nifty 50 gained 77 points to close at 23,140.50. Broader markets remained mixed, with Nifty Midcap 100 in red and Nifty Smallcap 100 in green.
For the seventh consecutive week, the benchmark index Nifty ended on a negative note, marking its longest weekly losing streak since the COVID-led market decline in 2020. The sharp rise in the US 10-year bond yield, coupled with heightened volatility in Brent crude oil prices, has continued to weigh on market sentiment. The US 10-year bond yield is currently hovering at its highest level since 2007, adding to concerns over global financial conditions. With global headwinds refusing to fade, the real test for Nifty is whether the ongoing weakness has further room to run.
Technically, the weakness remains evident as Nifty is trading around 3% below its 50-day EMA and nearly 4% below its 100-day EMA, with both averages trending downward. The Daily RSI once again faced resistance near the 40 level and turned lower, indicating that the range has shifted into a super-bearish zone as per the RSI Range Shift theory. The failure of RSI to reclaim 40 suggests that every recovery attempt could face a familiar wall of selling pressure.
The other momentum indicators are also reinforcing the bearish setup. The Daily MACD remains bearish, with both the MACD and signal lines trading below the zero line. More importantly, the MACD histogram has remained below the zero line for the last 30 trading sessions, highlighting the persistence of negative momentum. Thirty sessions of negative histogram readings are difficult to ignore, and the next move could reveal whether momentum is merely weak or turning decisively weaker.
Going ahead, the 23,270–23,300 zone will act as a crucial hurdle for the index. As long as Nifty stays below 23,300, the broader downward trend is likely to remain intact, with the index potentially moving towards 22,800, followed by 22600. For now, 23,300 remains the line in the sand: will Nifty reclaim it to challenge the bears, or will the downside targets come into focus?
For the fifth consecutive week, the banking benchmark index Bank Nifty ended on a negative note and has now slipped below its recent swing low, indicating a continuation of the prevailing corrective trend.
The index is trading comfortably below its key short-term and medium-term moving averages, namely the 20-day, 50-day and 100-day EMAs, all of which are trending lower and reflecting sustained weakness in price structure. Further, the daily RSI has remained confined to the 46-33 range over the past 12 trading sessions, highlighting the absence of meaningful bullish momentum.
Going forward, the 55,100-55,000 zone is expected to act as a crucial support area, as it coincides with the 61.8% Fibonacci retracement of the previous upmove. A decisive break below 55,000 could accelerate selling pressure and drag the index towards the 54,400 level in the short term.
On the upside, the 56,000-56,100 zone is likely to act as an immediate hurdle. As long as the index remains below this resistance band, the broader bias is expected to remain negative.
Policybazaar (PB Fintech) witnessed a sharp 36% decline on September 24, significantly distorting its chart structure. The stock has slipped well below its key moving averages, indicating a deterioration in the overall trend. The RSI has plunged to 24 from 61, signalling strong bearish momentum, while the MACD line has slipped below the zero line, further reinforcing the bearish bias.
The Rs 1,160–1,150 zone remains a crucial support area, as the stock witnessed a sharp rebound from this zone in May 2024. A decisive breach below this support could trigger a further extension of weakness.
Turtlemint has declined nearly 40% over the past two sessions and is now trading significantly below its listing price. The ADX indicator shows DI- comfortably placed above DI+, highlighting the strong dominance of bears over bulls. The Rs 98–100 zone is likely to act as an immediate resistance, and the bearish bias is likely to persist as long as the stock trades below this zone.
Given the sharp deterioration in technical indicators across the insurance sector, bottom fishing in the affected stocks may be premature. It would be prudent to wait for greater clarity on price action, signs of stabilisation and further regulatory announcements before considering fresh positions.
From an options perspective, significant call writing is visible at the 23,300 and 23,400 strikes, with call writing nearly twice and thrice the corresponding put writing, respectively, making these levels likely immediate resistance zones. On the downside, the 23,000 strike has witnessed substantial put writing, nearly four times stronger than call writing, indicating strong positional support around this level. Going into the monthly expiry on Tuesday, the 23,000–23,400 range emerges as the likely trading range based on the current option chain positioning, with 23,000 as the immediate support and 23,400 as the key resistance zone.
Technically, Nifty Pharma and Healthcare are expected to maintain their leadership position and continue outperforming the broader market.
Technically, JUBLPHARMA, PRIVISCL, ZYDUSLIFE, HBLENGINE and AETHER are looking good.