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Indian equity indices extended losses for a second straight session on 6 August, with Nifty closing below 24,600. Sensex ended 166.26 points lower, or 0.21%, at 80,543.99, while Nifty declined 75.35 points, or 0.31%, to settle at 24,574.20. 

After a flat opening, Nifty traded in a narrow range throughout the day and closed near the day’s low. Market participants largely stayed on the sidelines ahead of the RBI’s Monetary Policy Committee (MPC) decision. As anticipated, the central bank kept the policy rate unchanged and maintained a neutral stance, leading to a muted reaction across the market.

Nifty 50 ended the session on a cautious note, reflecting investor anxiety ahead of the RBI policy announcement and global trade tensions triggered by a fresh tariff warning from US President Donald Trump. The index traded in a narrow range, with muted movement across most sectors, as traders awaited clarity on interest rate direction and inflation outlook. 

Technically, it formed a small-bodied candle, indicating indecision, and hovered near its key support levels. Broader market participation remained subdued, with the advance-decline ratio tilted slightly in favour of decliners, suggesting underlying weakness. Select PSU and FMCG stocks showed resilience, while IT and Auto names faced mild profit booking.

Technically, Nifty 50 continues to find support at its 100-EMA, providing short-term stability. The RSI has been moving sideways and is currently positioned at 38, indicating a lack of momentum. Additionally, the MACD remains in a negative crossover, trading below both its signal line and the zero axis. 

This combination of indicators suggests a cautious near-term outlook, with momentum still subdued. A strong reversal seems unlikely unless the index decisively breaks through key resistance levels, accompanied by sustained buying pressure.

According to O'Neil’s methodology of market direction, market status has been downgraded to an ‘Uptrend Under Pressure’ as Nifty breached its 50-DMA and the ‘distribution day count’ rose to seven.  

Nifty 50 continues to trade in a consolidation phase, closing below its 100-day EMA and fluctuating within 24,500-24,800. A sustained move above 24,900 could indicate a bullish breakout, potentially paving the way for an upward move toward 25,300. 

On the downside, immediate support is seen in 24,480-24,400, where buyers may step in. However, a decisive break below this support could trigger a deeper correction, with the index likely to test 24,200. Price action around these key levels will be crucial in determining the index’s short-term direction.

On Wednesday, Bank Nifty opened slightly lower at 55,329.80, registering a modest gap-down from the previous close of 55,360.25 amid cautious sentiment. The session remained volatile, with the index swinging between an intraday high of 55,559.40 and a low of 55,227.70, marking a range of nearly 332 points.

Despite early weakness, Bank Nifty staged a recovery and settled at 55,411.15, gaining 50.90 points, or 0.09%, on the day. The formation of a small bullish candle on the daily chart reflects buying interest at lower levels, supported by strength in stocks like CANBK, FEDERALBNK, SBIN, and HDFCBANK. 

The momentum indicator RSI continues to trend sideways and is currently positioned at 37, indicating weakening strength and limited upside traction. Additionally, the MACD has formed a negative crossover, reinforcing the short-term bearish bias. 

According to O’Neil’s methodology of market direction, Bank Nifty is in an ‘Uptrend Under Pressure’, highlighting a fragile market environment. This classification underscores increasing caution and early signs of institutional distribution, suggesting elevated risk in the near-term outlook.

Bank Nifty closed on a positive note. Meanwhile, the index successfully defended the previous session’s low, reflecting signs of resilience. A potential reversal from the current levels could propel the index toward 56,400-56,450, where its 50-DMA is positioned. Sustained buying interest above this range may reinforce upward momentum. 

However, failure to hold the critical support at 55,200 could trigger a corrective move, with the index likely to retest its 100-DMA—about 646 points below the current level—indicating heightened downside risk.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. Trade name: William O'Neil India Pvt. Ltd. (Sebi Registered Research Analyst Registration No.: INH000015543).

Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.

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.

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