The NIFTY50 index starts Monday trading under pressure, with experts watching if it can hold the key support level at 25,700 amid mixed global signals. Recent sessions saw the index pull back from gains, failing to break above 26,000, as heavy selling hit major stocks last week.
Market Overview and Recent Performance
The NIFTY50 closed the previous week on a weak note, giving up most of its early gains due to profit taking in heavyweight shares. This marks the second straight week where the index could not sustain above the 26,000 mark, a level that has become a tough barrier.
Global cues add to the uncertainty. Asian markets showed mixed results overnight, with some gains in Japan but losses in China. U.S. futures pointed lower after a volatile Friday close, influenced by tech sector reports. In India, the GIFT NIFTY futures signaled a red opening, down about 0.5 percent in early hours.
Traders point to ongoing concerns like inflation data and upcoming corporate earnings as factors weighing on sentiment. Last week’s data showed the index dropping 1.2 percent overall, with banking and energy sectors leading the decline.
The broader SENSEX index mirrored this trend, slipping below 80,000 briefly before a minor recovery. Analysts note that foreign institutional investors sold off holdings worth over 5,000 crore rupees last week, adding to the downward push.
Technical Analysis and Key Levels
On the charts, the NIFTY50 now sits at a critical juncture. The 25,700 level acts as a strong support, based on past breakout points and options data. If it holds, the index might rebound toward 26,000 or higher.
Experts highlight resistance at 26,000, where maximum call open interest builds up for the November 4 expiry. This suggests sellers could dominate if the index approaches that zone.
Here are key technical indicators for Monday:
- Relative Strength Index (RSI): At 55, showing neutral momentum but close to oversold if selling continues.
- Moving Averages: The 50-day average at 25,800 provides additional support, while the 200-day at 24,500 offers a deeper floor.
- Volatility Index: India VIX rose 8 percent last week, signaling higher market swings ahead.
A break below 25,700 could lead to further drops toward 25,500 or even 25,000, according to chart patterns. On the upside, clearing 26,000 might target 26,300 in the short term.
Options data reinforces this view. The highest put open interest at 25,700 indicates buyers defending that level, while calls at 26,000 show resistance.
Impact of Global and Domestic Factors
Several events shape the outlook. The U.S. Federal Reserve’s rate decision later this week looms large, with markets pricing in a 25 basis point cut. Any surprise could ripple to Indian equities.
Domestically, Diwali festivities wrapped up, but trading volumes remain thin due to holidays. Earnings from key firms like HDFC Bank and Reliance Industries beat expectations last quarter, yet recent reports from pharma and auto sectors disappointed.
Inflation figures for October, due mid-month, could influence the Reserve Bank of India’s stance. Retail inflation eased to 5.5 percent, but food prices stay high.
Geopolitical tensions in the Middle East add risk, pushing oil prices up 2 percent last week. This hurts import dependent economies like India.
Traders also watch the rupee, which weakened to 84.10 against the dollar, its lowest in months. A weaker currency boosts exports but raises import costs.
Stocks in Focus and Trading Strategies
Certain stocks show buildup in futures and options. Long positions built in finance names like Shriram Finance, suggesting potential upside if the market stabilizes.
Short buildup appeared in utilities and pharma, such as NTPC and Cipla, pointing to downside risks.
Top traded contracts include BEL and Maruti in futures, with Infosys calls seeing high volume.
For traders, strategies include:
| Strategy | Description | Potential Risk |
|---|---|---|
| Bull Call Spread | Buy call at 25,800, sell at 26,000 | Limited loss if index falls |
| Bear Put Spread | Buy put at 25,700, sell at 25,500 | Gains on downside break |
| Straddle | Buy call and put at 25,900 | Profits from big moves either way |
Experts advise using stop losses, especially with volatility up. New traders should focus on understanding risks before diving in.
Outlook for the Week Ahead
Looking forward, the NIFTY50 needs to defend 25,700 to avoid a deeper correction. A hold here could spark buying interest, pushing toward previous highs.
If global markets steady, Indian indices might follow suit. Watch for U.S. jobs data on Friday, which could sway sentiment.
Analysts remain cautiously optimistic for the medium term, citing strong GDP growth projections of 7 percent for India this fiscal year. Yet, short term hurdles persist.
Share your thoughts on NIFTY50’s Monday move in the comments below, and spread this article if it helped your trading prep.
