Weekly Market Analysis: Nifty 50 and Bank Nifty Face Significant Declines
The Indian stock market experienced a turbulent week, with both the Nifty 50 and Bank Nifty indices recording their steepest declines since September 2024. Despite the global monetary developments, including the US Federal Reserve’s recent rate cut, market sentiment remained under pressure. Below is an in-depth technical analysis of the market movements and key levels to watch.
Nifty 50: Under Pressure Below Key Levels
The Nifty 50 index ended the week with a sharp decline of 3.7%, marking its highest weekly drop since September 2024. Technical analysis indicates that the index could face sustained selling pressure below the 24,000 level. Key support levels to monitor include:
- Primary Support: 23,590 — A decisive break below this could accelerate the downward momentum.
- Secondary Support: 23,250 — This level could act as the next safety net if 23,590 fails to hold.
On the upside, the Nifty will likely encounter resistance near the 24,000 mark, making it a crucial level for a potential reversal.
Bank Nifty: Testing Crucial Supports
The Bank Nifty index fell by 4.27% as of Friday, 1 PM Indian Time, making it the largest weekly drop since September 2024. The index, which has been trading sideways between 50,400 and 53,500 since June 2024, now faces the risk of breaking its established range.
Key Technical Levels for Bank Nifty:
- Immediate Support: 51,250 — A breach here could push the index towards the next critical support level.
- Secondary Support: 50,250 — A sustained move below this level could signal a deeper correction.
- Resistance: 51,860 — Any recovery attempt is likely to face selling pressure at this level.
Sector Performance: Top Gainers and Losers
Gainers:
- Dr. Reddy’s Laboratories
- Hindalco Industries
- Maruti Suzuki
Losers:
- Tech Mahindra
- Axis Bank
- Larsen & Toubro
These sectoral movements reflect the broader market’s mixed sentiment amid heightened volatility.
Global Context: The Fed’s Rate Cut and Market Sentiment
Despite the US Federal Reserve trimming its benchmark interest rate by 25 basis points to 4.25-4.50% on December 18, the outlook dampened global markets. The Fed revised its future rate cut projection, now anticipating only two additional 25-basis-point cuts by the end of 2025, down from market expectations of three or four cuts. This more conservative stance has added to the cautious sentiment among investors worldwide.
Outlook for the Coming Weeks
With the Nifty 50 and Bank Nifty both under significant selling pressure, the focus will be on key technical levels. If the indices break below their respective support levels, further downside cannot be ruled out. Investors and traders should exercise caution and monitor global developments, especially monetary policy signals, which could further influence market trends.
In the meantime, market participants are advised to keep an eye on broader market indicators and maintain a disciplined approach to trading amid the ongoing volatility.
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