First up, thoughts and prayers to all those who lost their loved ones on board the Air India AI-171 flight to London from Ahmedabad. Team CNBC-TV18 stands in solidarity with the families of all the victims and survivors.
Weekly options expiry of the Nifty 50 contracts bought along with it a fair share of volatility. Expiry aside, even the cues going in to any normal trading session were not the best to begin.
US President Donald Trump’s threat to impose unilateral tariffs in two weeks from now, no clarity on what exactly transpired between the US and China in London, a potential military confrontation in the Middle East and the resultant spike in Crude Oil prices, nothing added up to give the Nifty and the markets its seventh straight day of gains.
Lack of support from the banking index, which was the key catalyst in taking the index past 25,000 yet again, meant that the Nifty had to fend for itself, which it couldn’t. Axis Bank and ICICI Bank were among the top contributors to the 250-point drop on the index, which also meant a first close below the 25,000 mark after June 5.
Profit booking continued in the high-flying broader market names. All the hot themes of the last one month, railways, defence, capital markets, all of them witnessed selling pressure for yet another day, continuing to cool off from the solid gains witnessed in the recent past.
As there was volatility, there were block deals. Some expected, some not. Asian Paints saw Reliance Industries pare some stake, while MapMyIndia’s parent ended at the lows of the day after a ₹480 crore block. Friday’s session will put the spotlight on three Jubilant group companies, as promoters plan to sell stake via block deals in all three of them.
Despite Thursday’s fall, the Nifty is still up for the week, only by just though, and the bulls would be hopeful that the fall was just an expiry-related aberration and the index is back to winning ways and end the week on a high. The bulls would also hope that the downside support of 24,850 is protected, even though 25,200 continues to act as a barrier.
What do the chartists say?
Nifty has formed a consolidation breakdown on the daily chart, indicating bearish pressure around the 25,200 mark, said Rupak De of LKP Securities. The index has found support at 24,850 on the downside and 25,200 remains a barrier. Despite the sharp fall, other technical indicators remain intact, indicating that the broader trend is still strong and a reversal is possible. De added that a fall below 24,850 could weaken market sentiment further.
Nagaraj Shetti of HDFC Securities said that the near-term uptrend of the Nifty remains intact and that the index is currently facing stiff resistance above 25,200 levels and a only a sustained move above 25,200 can take the index quickly to 25,600 levels.
The Nifty Bank is showing signs of exhaustion at higher levels and some short-term cooling is likely on the index, according to Om Mehra of SAMCO Securities. “The index is currently hovering near the previous breakout zone of 56,000–56,200. A sustained breach below this zone could open the gates for further downside towards the next support at 55,300,” he said, adding that 56,700 on the upside remains a resistance zone. A break below 55,300 on the downside could turn the near-term momentum to negative.
