Stock market today: Gift Nifty down 130 pts; levels to watch for Nifty, Sensex & NiftyBank

Indian equity benchmark indices are likely to open sharply lower on Friday as global markets may sour the mood, wrapping up a week that saw mild losses, as profit-taking could offset the impact of an improving corporate earnings outlook and expectations of progress in India–US trade talks.

Nifty futures on the NSE International Exchange traded 129.20 points, or 0.50 per cent, down at 25,498, hinting at a negative start for the domestic market on Friday. Asian stocks were trading sharply lower. KOSPI crashed nearly 3 per cent, while Nikkei was down nearly 2 per cent. Hang Seng was seen one per cent lower.

Concerns over delayed Fed rate cuts due to rising services inflation further dampened mood, even as hopes lingered for a positive outcome from U.S.–India trade talks, said  Prashanth Tapse, Senior VP (Research) at Mehta Equities. "Expect Nifty to stay range-bound with a negative bias," he said.

US stocks closed in negative territory on Thursday, with a resumption of Tuesday's tech selloff. The Dow Jones Industrial Average fell 397.35 points, or 0.84 per cent, to 46,913.65, the S&P 500 lost 75.91 points, or 1.12 per cent, to 6,720.38 and the Nasdaq Composite tanked 445.80 points, or 1.90 per cent, to 23,053.99.

Oil edged up on Friday following three days of declines on worries about excess supply and slowing demand in the US, though prices appeared to be headed for a second week of losses. Brent crude futures rose 21 cents, or 0.33 per cent, to $63.59 a barrel. US West Texas Intermediate crude was at $59.65 a barrel, up 22 cents, or 0.37 per cent.

The dollar retreated in early Asia trade on Friday, leading declines among major currencies as investors lacking official data on the US labour market seized upon signs of weakness in private sector surveys. The dollar index fell 0.5 per cent to 99.674. Gold was firm just below $4,000 an ounce. Brent crude held at $63.64 a barrel.

Participants should avoid aggressive positions and maintain a stock-specific trading approach, with a preference for large-cap and larger mid-cap stocks, as the broader market underperformance may persist in the near term, 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 3,263.21 crore on Thursday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 5,283.91 crore on a net-net basis.

Nifty50 & Sensex outlook

The current market texture is weak, but a fresh sell-off is possible only after the dismissal of 25,450/83,100. Below this level, the market could slip to 25,300-25,250/82,700-82,500, said Shrikant Chouhan, Head Equity Research, Kotak Securities. "On the upside, above 25,625/83,700, the market could move up to 25,700/84,000. Further upside may also continue, potentially lifting the market to 25,800/84,300."

A long bear candle was formed on the daily chart with a long upper shadow. Technically, this market action indicates a sell on rise opportunity. Formation of upper shadows in the last 5-6 candles during downtrend signal presence of strong resistance on the rise, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

"The underlying trend of the Nifty continues to be weak. The market is now entering a crucial support zone around 25,400 levels, Immediate resistance is placed at 25,700," he adds.

Nifty Bank outlook

Nifty Bank may extend consolidation of the last two weeks in the range of 57300-58500 thus forming base after the next leg of up move. A close below 57300 will open downside towards the key support area of 56,800–56,500. On the higher key resistance is placed at the recent all time high of 58,577, said Bajaj Broking.

"A move above the same will open further upside towards 59,000. Overall, the outlook remains positive, and current pullbacks should be viewed as buying opportunities within these support areas. PSU Banking stocks to extend the recent outperformance," it said.

The 20-day EMA zone of 57,400-57,300 will act as immediate support for Nifty Bank. Any sustainable move below the level of 57300 will lead to further correction upto 56800 level. While, on the upside, the zone of 57,900-58,000 will act as a crucial hurdle for the index, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.