The Indian equity markets are expected to open a gap down following the tornado that hit Wall Street. Wall Street was hammered for the second consecutive session after China retaliated with new tariffs on US imports. The sell-off has been triggered by recession concerns.
What’s the next stop for Nifty? Key levels to watch
The Nifty 50 may drag as low as 22,500 in Monday’s trade according to the market experts. Ajit Mishra – SVP, Research, Religare Broking explained that “Technically, the Nifty has broken below all major price and moving average supports, indicating potential for further downside. The immediate support lies at 22,600, while a decisive breach could open the door towards 22,100. On the upside, any recovery is likely to face stiff resistance in the 23,100–23,400 zone. Interestingly, the banking index is displaying strength and could continue to outperform. It has immediate support at 50,700, with stronger support at around 50,000. If the index breaches 52,800, it may pave the way for fresh highs.”
“An overlap of the 22,677 level shall put the structure in favour of bears and shall lead to a short and medium-term trend reversal. Nifty has closed below the short-term moving averages and the daily momentum indicator has a negative crossover which is a sign of weakness,” said Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan.
Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal Financial Services added, “This week, Indian markets are expected to be volatile on the back of concerns over the impact of the US reciprocal tariffs and potential announcements of further sector-specific tariffs during the week. Also, the focus will be on RBI’s monetary policy outcome on April 9, where the market is expecting another 25 bps rate cut, and the Q4FY25 earnings season kicking off with TCS results on April 10. Investors will also watch out for March CPI data from the US and India to be released this week.”
Tech sector under pressure: The big concern
Also, as recession fears rock the US, the tech stocks may see another meltdown. To give a context, the tech-heavy US Index, the Nasdaq Composite lost 5.8% to 15,587.79, following a drop of 6% on Thursday. It is now 22% off from its recent high, which it touched in December, marking a bear market in technical terminology.
The Dow Jones Industrial Average dropped 2,231.07 points, or 5.5%, to 38,314.86 on Friday, the biggest decline since June 2020 during the Covid-19 pandemic. This follows a 1,679-point crack on Thursday. Also, it was the first time that the index had ever shed more than 1,500 points on back-to-back days. The S&P 500 nosedived 5.97% to 5,074.08, shedding 4.84% on Thursday.
The big pockets of worry in the market
Investor sentiment was rattled by the severe selling in markets across the US following the imposition of reciprocal tariffs and retaliatory measures by other nations, raising fears of a global trade war. Not only has it stoked recession worries globally, but the steep decline in the US dampened hopes of a recovery anytime soon.
Adding to the woes, foreign institutional investors (FIIs), who had turned net buyers briefly, resumed selling, deepening the bearish mood. They have sold over Rs 10,000 crore in the first 5 days of April
Though the selloff was broad-based, the IT and metal sectors bore the brunt of the selling pressure, witnessing the heaviest losses, plunging between 7% and 9%. However, select pockets like FMCG, banking, and financial services showed relative resilience, which helped limit the downside to an extent. Broader markets mirrored the trend, with mid and small-cap indices shedding between 2% and 2.6%.
All in all, the domestic markets as well as the global markets are expected to remain volatile for the week.