Stock market today: Gift Nifty down 98 points; key levels for Nifty, Sensex & Nifty Bank

Indian equity benchmark indices are set to open on weak note on Tuesday, after logging their steepest drop in more than two months in the previous session, as uncertainty over a US trade deal and caution ahead of the Federal Reserve's rate decision weigh. Traders are expecting the US Fed to cut rates on Wednesday.

Nifty futures on the NSE International Exchange traded 97.70 points, or 0.37 per cent, down at 25,967, hinting at a negative start for the domestic market on Tuesday. Asian stocks fell on Tuesday as investors braced for a cut in US interest rates later this week. KOSPI and Hang Seng were down half a per cent to three-fourth a per cent. Nikkei managed to inch higher.

"We expect the markets to remain volatile ahead of the US Fed policy outcome, with commentary on the interest-rate trajectory shaping investor sentiment," said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. "On the domestic front, factors like dollar movement, FII flow trends and the market liquidity environment may likely influence market trajectory."

Wall Street's main indices closed lower on Monday as investors waited nervously for the Federal Reserve monetary policy. The Dow Jones Industrial Average fell 215.67 points, or 0.45 per cent, to 47,739.32, the S&P 500 lost 23.89 points, or 0.35 per cent, to 6,846.51 and the Nasdaq Composite shed 32.22 points, or 0.14 per cent, to 23,545.90.

In currencies, the dollar was mostly steady on Tuesday. The dollar index was at 99.09. The index is down nearly 9 per cent this year, on pace for its biggest annual decline since 2017. While a rate cut is expected, some strategists think the Fed's policy committee could be sharply divided.

In commodities, gold was 0.13 per cent higher at $4194.11 per ounce ahead of the Fed meeting. Oil prices steadied after diving 2 per cent in the previous session as market participants kept a close eye on peace talks to end Russia’s war in Ukraine. Brent crude futures were flat at $62.48 a barrel. US West Texas Intermediate crude was at $58.84, down 0.07 per cent.

In the current environment, we continue to recommend a cautious, stock-specific approach — focusing on defensives, quality names, and fundamentally strong rate-sensitive sectors — while avoiding aggressive exposure in the smallcap space until cues turn more supportive, said Ajit Mishra, SVP of Research at Religare Broking.

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 655.59 crore on Monday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 2,542.49 crore on a net-net basis.
 

Nifty50 & Sensex outlook

Technically, Nifty has formed a long bearish candle and also closed below the 20-day SMA on the daily charts, which is largely negative. We believe that as long as the market is trading below the 20-day SMA or 26,000/85,400, the weak sentiment is likely to continue, said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

On the downside, it could slip till 25,850/84,800. Further downside may also continue, potentially dragging the index to 25,750/84,500. On the flip side, above 26,000/85,400, we could see a one pullback rally up to 26,100-26,125/85,700-85,800," he adds.

Nifty slipped below the short-term 21-DMA around 26,000, which becomes the immediate resistance zone. A sell signal on the MACD and a bearish divergence on the RSI further reinforce the cautious tone, said Nilesh Jain, Head of Technical and Derivatives Research Analyst at Centrum Broking. "The setup points to a consolidation phase, with the index likely to oscillate within the broader 25,800–26,200 range in the near term."
 

Nifty Bank outlook

The zone of 59,000–58,900 zone, which coincides with the previous swing low, is likely to act as an important support zone for Nifty Bank, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

"Any sustained move below 58,900 could lead it breaking its 20-day EMA and moving down, potentially taking it lower towards 58,700 followed by 58,500. On the upside, the zone of 59,400-59,500 is likely to act as a strong resistance for the index," it said.

Bank Nifty has formed a bearish candlestick pattern with a long lower shadow. It on expected lines is seen consolidating and forming a base in the range of 58500-60100, said Bajaj Broking. "We expect the index to extend the current consolidation in the coming sessions," it said.

Only a follow through strength above the last week high will open further upside towards 60,400 and then towards 61,000 levels in the coming weeks. Key short-term support is placed at 58,200-58,600 levels being the confluence of the recent low and the major breakout area. Holding above the support area will keep the short-term bias positive, Bajaj Broking adds.