As the Indian stock market heads into trade on Tuesday, January 7, there’s a mix of caution and optimism in the air. While global markets have shown signs of recovery, the rise in HMPV virus cases remains a key factor to watch as investors brace for what could be a volatile session.
Global Trends Set a Positive Tone
On the back of positive global cues, Indian benchmark indices, including the Sensex and Nifty 50, are likely to open higher on Tuesday. Trends from the Gift Nifty (Global Indian Fixed Time Exchange) point towards a strong start, with the index trading around the 23,780 mark. This shows a premium of nearly 60 points over the previous Nifty futures close.
However, this upbeat sentiment comes after a sharp fall on Monday, when domestic equity markets slumped considerably. Despite the early optimism, there are concerns about market volatility and the potential impact of the rising HMPV virus cases.
Monday’s Market Slump: A Reality Check for Investors
On Monday, January 6, the Nifty 50 and Sensex suffered heavy losses, with the Nifty slipping below the crucial 23,700 level. The Sensex closed down by 1,258.12 points, or 1.59%, at 77,964.99, while the Nifty 50 fell by 388.70 points, or 1.62%, to settle at 23,616.05.
A sharp sell-off was seen across the board, particularly in heavyweights. This decline has raised questions about the sustainability of the recent rally and whether more downside could be on the horizon.
Technical Indicators: Caution Ahead
Monday’s trade left a noticeable mark on the charts. Nifty 50 formed a long bearish candle, signaling a potential reversal of the bullish momentum that had characterized the market in recent sessions. According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the formation of this bearish candle indicates a possible “bull trap,” as the recent upside breakout was quickly negated.
“The Nifty 50 has slipped below the crucial 200-day Exponential Moving Average (EMA) once again at 23,700, which suggests that the short-term trend remains weak,” Shetti explained. He further noted that the next level of support for the Nifty could be around 23,500 to 23,400, with additional downside potential extending to 23,460 and 23,260.
Potential Market Weakness
- The breach of the 23,700 support level could lead to further weakness.
- Key support levels are now seen at 23,500 and 23,400.
- An upside bounce could face resistance around 23,800.
For investors, this technical outlook suggests caution in the short term. The immediate risk seems to be on the downside, with crucial support levels likely to come under pressure in the coming days.
Impact of HMPV Virus: A Cloud Over Global and Domestic Markets?
While global trends and technical charts suggest a positive opening for Indian markets, the rise in HMPV (Human Metapneumovirus) cases remains a key concern. This relatively new virus, which is spreading rapidly in several countries, could potentially affect consumer sentiment and disrupt the global supply chain. Such disruptions would likely spill over into emerging markets like India.
The growing fear of the HMPV outbreak could result in a decline in market confidence, especially in sectors such as travel, hospitality, and retail. Investors will be closely monitoring developments around this issue in the coming weeks.
