The Indian equity market reversed Tuesday’s gains, with the Nifty ending at a five-month low. The tone was negative from the beginning; however, buying in select heavyweights from the IT and banking sectors helped limit the decline as the day progressed. Consequently, the Nifty index traded within a range for most of the session, settling at the 23,349.90 level.

On the sectoral front, realty and IT performed well, while energy, metals, and FMCG sectors closed in the red.

Adani Group stocks slid as a US court indicted Gautam Adani and other group executives on charges of bribery related to certain solar projects. At their lowest point, the Adani Group’s cumulative market capitalisation had declined by ₹2.6 lakh crore. Shares of Adani Group companies fell between 7% and 23% today.

The foreign portfolio investors have been relentlessly selling Indian equities with nearly ₹35,000 crore outflow in November month till date, which has been among the key reasons behind the recent market downtrend.

The Indian rupee plunged to record low today, pressured by continuous foreign outflows and renewed strength in the dollar as investors lose hopes of aggressive rate cuts by the US Federal Reserve.

Markets are expected to react to the preliminary release of November month manufacturing and services PMI of US, Europe and India on Friday.

In the near term, Siddhartha Khemka of Motilal Oswal expects market to remain volatile on account of global geo-political concerns, relentless FII selling and uncertainty around the outcome of state assembly elections in Maharashtra and Jharkhand.

“Markets have been gradually trending lower, though the pace of decline has moderated due to selective rebounds in heavyweight sectors, particularly IT and banking. Similarly, the broader indices are also under pressure but are currently finding support near their long-term moving average, the 200-day exponential moving average (DEMA),” said Ajit Mishra of Religare Broking.

What do the Nifty50 charts indicate?

After opening on a negative note, the Nifty50 index slipped into sharp weakness in the early part of the session. It later shifted into a range bound action for better part of the session and finally closed the day with minor upside recovery note.

“A reasonable negative candle was formed on the daily chart with minor lower shadow. Technically, this market actions signal downtrend continuation pattern as per bearish sequence like lower tops and bottoms on the daily timeframe chart,” said Nagaraj Shetti of HDFC Securities.

The crucial 200-day EMA support has been broken again at around 23,500 levels after a recent failed upside bounce. The short-term market action post this downside breakout is going to be crucial. If Nifty fails to show any sharp weakness in the next one or two sessions, then chances of another upside bounce could come into play.

The short-term trend of Nifty continues to be weak and Shetti expects market to slide down to 23,200-23,100 levels in the near term. Immediate resistance is placed at 23,500 levels.

LKP Securities’ Rupak De said the Nifty remained below the 200-DMA, indicating persistent weak sentiment in the market. The RSI indicator has reentered a bearish crossover, further supporting the negative sentiment.

“In the short term, sentiment remains weak, with support placed at 23,200. A fall below this level could trigger a correction in the market. On the upside, resistance is placed at 23,550; a decisive move above this level might induce a rally in the market,” De said.

While there are questions about sustainability, it is clear that until a decisive break of the zone at 23800-24000 is seen, any pullbacks should be seen as opportunities to exit long positions. Given the current circumstances, 23200-23100 is likely to be tested during this comparable period, said Osho Krishan of Angel One.

Nifty Bank struggles to gain momentum

The Nifty Bank index started the session on a stable note but faced stiff resistance early on, slipping into a bearish-to-sideways trend for most of the day. Intense selling pressure emerged in the 50,700–50,800 zone, where significant call writing highlighted resistance levels.

This selling dragged the index to an intraday low of 49,787, with minor recovery attempts supported by put writers (Bulls). Ultimately, the index closed marginally lower, losing 0.50% (-253.60 points) at 50,373.

The trading session reflected sustained selling activity at higher levels, with the index confined to a narrow range between its 10-day exponential moving average (DEMA) at 50,800 and its 200-DMA at 49,900. These technical levels are critical in shaping the near-term trend,” said Dhupesh Dhameja of SAMCO Securities.

Dhameja said that a breakdown below the 200-DMA could extend the current downtrend, while a recovery above the 50,800–51,000 zone, where notable call-writing activity persists, would be needed to alter the bearish sentiment. For now, sellers are expected to dominate unless the index breaches 51,300, with any rallies likely to invite fresh selling pressure.

Meanwhile, Om Mehra, Technical analyst at SAMCO Securities expects the Nifty Bank index to oscillate within a broader range, with immediate support seen at 49,700 and resistance around 51,000.

These are the stocks to watch ahead of Friday’s trading session:

SJVN signs MoU with Rajasthan Government’s Energy Department for the development of renewable energy in the state. Under the MoU, SJVN would develop 5 GW pumped storage projects & 2 GW floating solar projects in Rajasthan.

Afcons Infrastructure has been declared as the lowest bidder for a project worth ₹1,274 crore from Uttarakhand Project Development & Construction Corporation.

Life Insurance Corporation of India (LIC) has raised its stake in LTIMindtree from 5.033% to 7.034% during the period between March 20 and November 19, 2024.