Nifty 50 on 6 January
Nifty 50, India’s benchmark index, closed 375 points lower on Monday, marking its second consecutive session of decline to end slightly above 23,600. Weighed down by global market cues, the index opened on a muted note, traded lower throughout the day, and closed near its session low. This price action formed a bearish candle on the daily chart, characterized by a lower-low and lower-high structure.
Read this | Stock market crash: Sensex, Nifty 50 crack over 1.5% each; HMPV virus scare among 5 factors behind selloff
The index has re-entered correction territory as investors grapple with concerns over HMPV virus outbreak in India, a strong dollar, and caution ahead of Q3 FY25 earnings. The market breadth reflected bearish sentiment, with the advance-decline ratio sharply skewed at 1:8 in favor of decliners.
From a technical standpoint, Nifty 50 failed to sustain above its 200-day moving average (DMA) and is now trading just above a critical support level—an upward-sloping trendline connecting the lows of 21 November and 31 December 2024. The 14-day Relative Strength Index (RSI) has weakened further, hovering around 40–41, while the Moving Average Convergence Divergence (MACD) indicator remains in negative territory.
According to O’Neil’s market direction methodology, Nifty gained over 1.7% on higher volumes, prompting an upgrade in market status to a Confirmed Uptrend. However, the status could be downgraded to Uptrend Under Pressure if the distribution day count rises or if Nifty breaches its key support levels.
Currently, the index has slipped below its 200-DMA but is holding marginally above the critical support level of 23,400. A decisive fall below 23,400 could trigger further downside, potentially dragging the index toward 23,000. Conversely, any upward movement is likely to face resistance in the 24,000–24,200 range.
Nifty Bank performance
The Bank Nifty opened on a muted note and exhibited high volatility throughout the session. On Monday, it formed a bearish candle with a lower-high and lower-low price structure on the daily chart, breaching its 200-DMA with a negative bias. The index opened at 50,990.65, traded within a range of 51,671.60–49,751.00, and closed at 49,922.00, recording a steep loss of 1,066.80 points (-2.09%).
Read this | Will foreign investors return to Indian markets in 2025?
On the technical front, the Relative Strength Index (RSI) has tilted slightly downward, positioned at 34, while the MACD continues to trend in negative territory on the daily chart.
According to O’Neil’s market direction methodology, the market status has shifted to a Downtrend as Nifty breached its 200-DMA and is now trading below all key moving averages. The status could be upgraded to a Rally Attempt if the index establishes a bottom and holds above its recent low for three consecutive sessions.
Currently, the index is trending with a negative bias, having breached its 200-DMA. Immediate support is positioned at 49,500, and a break below this level could push the index further down to 48,500–48,000. On the upside, the 200-DMA, located around 50,700, serves as a key resistance level to monitor in the near term.
Stocks to buy, recommended by MarketSmith India:
● Alembic Pharmaceuticals: Current market price ₹ 1,065.55 | Buy range ₹ 1,040–1,070 | Profit goal ₹ 1,250 | Stop loss ₹ 990 | Timeframe 2–3 Months
Also read | Devina Mehra: Take 2025 stock predictions with a bucket of salt
● IOL Chemicals & Pharmaceuticals: Current market price ₹ 429.75 | Buy range ₹ 420–432 | Profit goal ₹ 482 | Stop loss ₹ 397 | Timeframe 2–3 Months
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
