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Indian stock market benchmarks, Sensex and the Nifty 50, closed with losses on Thursday on profit booking in select heavyweights. The Sensex fell 375 points to end at 82,259.24, while the Nifty 50 settled at 25,111.45, down 0.40%. However, the mid and small-cap segments outperformed. The BSE Midcap index inched up by 0.07 per cent, while the BSE Smallcap index rose 0.30 per cent.

SHYAMMETL:Buy above 920 and dips to ₹880, stop ₹870 target ₹1000-1020

On 17 July, India’s leading benchmarks relinquished their early rally and slipped into negative territory, underscoring a shift toward caution among market participants. The Sensex, which had opened 119 points higher at 82,753, dipped to 82,219, while the Nifty, after climbing to 25,230, retreated to 25,101. The retreat highlights investors’ growing reluctance to commit fresh capital amid a pair of looming uncertainties.

With markets yielding to speculation over US President Trump’s stance on Federal Reserve Chair Jerome Powell causing some cold feet. While the White House dismissed reports of an imminent leadership change, Trump’s persistent public criticism of the Fed’s rate policy has fuelled anxiety about the central bank’s autonomy and the potential for monetary volatility. Also, as the August 1 deadline for an India-US trade pact approaches, traders are bracing for last-minute negotiations. New Delhi is reportedly pushing for tariffs more favorable than those secured by Indonesia, and any delay or dilution of terms could weigh further on market sentiment.

The continued resistance at higher levels shows that the trends are pressured at higher levels as steady supplies are emerging. As we have been mentioning, the trends have been curtailed due to geopolitical trends that have kept the enthusiasm on leash.

From a trading perspective, we can note that the Bank Nifty chart featured yesterday had cautioned that the supports are vital and the hold is critical. However, the lacklustre behaviour seen on the charts demonstrates that the trendline support area around 56800 is crucial. This is an important zone to watch out for, combined with the recent lows that have been formed in that region. Also, the positive DI lines that were giving us some hope seem to be giving way.

With a long body red candles, we may now have witnessed a bearish engulfing clearly hinting at some shorting possibility. Further, the way the trends have progressed its clear that the lack of participation seen now is hinting at a negative day today. With the scenario getting set for some decline, one should look to be careful with their positions. There are still some stock specific action that is keeping the participants active as the result season is underway.

With the inability to move above way above 57500 on an EOD basis we need to revisit the bullish bias. Momentums on hourly charts are indicating that the prices after settling down are now hinting at the onset of some more decline. As eager bullish participants begin to resign, we need to now start adopting some selling candidates into our trading basket.

The readings from the Option Data suggest that PCR has moved to 0.78, highlighting that the trends continue to face some pressure at higher levels, with some steady Call writing at 57000 levels continues to prove to be a hurdle for recovery levels fighting the buying interest at every rise. Trends remain challenged and we are trading in a difficult situation.

Raja Venkatraman is the co-founder of NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.

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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