Stock market today: Gift Nifty down 35 points; key levels for Nifty, Sensex & Nifty Bank

Indian equity benchmark indices are likely to open little changed, slightly lower on Tuesday, as investors remained cautious amid concerns over foreign fund flows and thin year-end volumes. In the commodities market, precious metals retreated sharply on Monday as investors booked profits after recent rallies.

Nifty futures on the NSE International Exchange traded 34.70 points, or 0.13 per cent, down at 25,922.50, hinting at a muted start for the domestic market on Tuesday. Asian shares slipped on Tuesday, tracking Wall Street's tech slump. Nikkei and KOSPI edged lower, while Hang Seng was up marginally.

Sentiment is dampened by an overnight sell-off on Wall Street led by technology stocks, rekindling concerns over stretched AI valuations, alongside persistent foreign outflows and lingering US–India trade frictions, said Prashanth Tapse, Senior VP (Research) at Mehta Equities. "Volatility is expected to dominate as December F&O positions roll into January," he said.

US stocks dipped on Monday, weighed down by a broad selloff. The Dow Jones Industrial Average fell 249.04 points, or 0.51 per cent, to 48,461.93, the S&P 500 dropped 24.19 points, or 0.35 per cent, to 6,905.75 and the Nasdaq Composite declined 118.75 points, or 0.50 per cent, to 23,474.35.

The US dollar was steady on Tuesday ahead of the Federal Reserve's release of its December minutes report. The index was at 98.033 in early trading, not far from a three-month low. The Indian rupee is expected to open little changed on Tuesday, hovering near the 90-per-dollar mark, with expectations of central bank support countering underlying dollar demand.

Oil prices held most of their overnight gains as Russia accused Ukraine of attacking President Vladimir Putin's residence. Oil prices slipped a little on Tuesday after gaining over 2 per cent overnight. Brent crude futures eased 0.5 per cent to $61.63 a barrel, having jumped 2.1 per cent on Monday.

The big mover overnight was silver, which slumped 8.7 per cent in the biggest one-day fall since August 2020. The metal bounced 1.7 per cent on Tuesday to $73.46 an ounce, having hit as high as $83.62 just a day ago. It is still up a staggering 150 per cent for the year. The sharp reversal brought gold and other precious metals with it. The yellow metal lost 4.4 per cent overnight.

We continue to maintain our consolidation view on the index, though the scheduled monthly expiry could lead to some intraday volatility, said Ajit Mishra, SVP of Research at Religare Broking. "Trading opportunities remain available across sectors. Participants are advised to stay selective, align trades with sectors showing relatively higher strength and keep position sizes in check."

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 2,759.89 crore on Monday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 2,643.85 crore on a net-net basis.  

Nifty50 & Sensex outlook

"A bearish candle on daily charts and a lower top formation on intraday charts indicate further weakness from the current levels. We believe that 26,000/85,000 or the 20-day SMA will be the key resistance zone for day traders. As long as the market trades below this level, weak sentiment is likely to continue," said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

On the downside, it could slip to 25,850–25,800 / 84,400–84,200. On the flip side, above 26,000/85,000, the market could bounce back up to 26,100/85,300. Further upside may also continue, which could lift the index to 26,150/85,500, he added.

The Nifty50 index has again fallen below the 20-DEMA, accompanied by a negative crossover in the daily RSI, suggesting a concerning market structure. The immediate support is placed around 25,900-25,850, while 25,700 remains a sacrosanct level for the near-term trend, said Osho Krishan, Chief Manager -Technical and Derivative research at Angel One.

"On the upside, the 26100–26150 zone stands out as a key hurdle, beyond which Nifty could regain momentum to re-test its lifetime highs in the coming sessions. Traders should keep a close tab on these levels and align their trades accordingly," he adds.  

Nifty Bank outlook

Nifty Bank is expected to remain in a consolidation phase and build a base within the 58,500–60,100 range over the coming weeks. A decisive move above the last two weeks’ high of 59,500 could pave the way for a fresh upside toward the recent all-time high near 60,100 in the weeks ahead, said Bajaj Broking.

"The sharp rally over the past two months remains well-contained within an upward price channel, highlighting sustained demand even at higher levels. On the downside, strong support is placed in the 58,300–58,600 zone, which coincides with the 50-day EMA and the previous breakout region. Holding above this support band would keep the broader trend constructive," it said.

The 50-day EMA zone of 58,600-58,500 will act as immediate support for Nifty Bank. Any sustainable move below 58.500 will lead to further correction upto 58,000 in the short term. On the upside, the zone of 59,100-59,200 will act as an important hurdle for it, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.