Markets trim losses but lower highs signal persistent weakness

Benchmark equity indices in Indian stock markets trimmed early losses on Monday as value buying emerged at lower levels, although analysts cautioned that the overall technical outlook remains weak.

The BSE Sensex rebounded nearly 700 points from the day’s low, while the Nifty 50 regained the key psychological level of 23,000 during late morning trading.

At 11.36 am, the Sensex was trading up 123.14 points, or 0.17 per cent, at 74,687.06, while the Nifty rose 43.2 points, or 0.19 per cent, to 23,194.30. Market breadth remained weak, with around 1,073 shares advancing, 2,739 declining and 162 unchanged.

Earlier in the session, the Sensex had fallen to an intraday low of 72,949.26, while the Nifty slipped to 22,955.25.

Among the top gainers on the Nifty were Hindalco Industries, UltraTech Cement, Grasim Industries and JSW Steel. On the losing side were Bharat Electronics Limited, Power Grid Corporation of India, Max Healthcare, Shriram Finance and Coal India.

Value buying supports rebound

Market participants said bargain hunting helped lift indices after several sessions of declines. Metal, auto and FMCG stocks led the recovery as investors stepped in at lower valuations.

The rebound also came after the volatility gauge, India VIX, eased around three per cent to trade below the 22 level. Analysts said this suggested expectations of reduced selling pressure in the immediate term, though the index remaining above 18 still indicates potential near-term volatility.

Global developments lift sentiment

Investor sentiment also received some support from developments related to the ongoing tensions in West Asia.

According to reports, the United States is preparing to announce a multinational coalition aimed at escorting commercial vessels through the Strait of Hormuz, a crucial maritime route that handles roughly 20 per cent of the world’s oil supply.

In addition, two India-flagged liquefied petroleum gas carriers, Shivalik and Nanda Devi reportedly crossed the strait last week carrying around 92,700 metric tonnes of LPG, easing immediate concerns over supply disruptions.

External Affairs Minister Subrahmanyam Jaishankar also said in an interview with Financial Times that diplomatic engagement with Iran had yielded some progress.

Global cues were supportive as well, with US stock futures trading higher. Futures linked to the Nasdaq Composite rose as much as 0.7 per cent, while contracts tied to the Dow Jones Industrial Average and the S&P 500 gained about 0.54 per cent and 0.66 per cent respectively.

Bearish technical trend persists

Despite the intraday recovery, market analysts said the broader technical structure remains negative.

Shrikant Chouhan, head of equity research at Kotak Securities, was quoted by moneycontrol as saying that the market has been forming lower highs and lower lows on daily charts, while the weekly chart shows a long bearish candle.

He noted that as long as the indices remain below the levels of 23,500 on the Nifty and 75,300 on the Sensex, the weak trend is likely to continue.

According to Chouhan, the market could extend its correction towards 22,800 on the Nifty and 73,600 on the Sensex, with the possibility of further declines towards 22,600 and 73,000 if selling pressure persists.

Derivatives data also indicates a bearish tilt. Analysts at Axis Securities said the Nifty options chain shows strong call resistance between 24,000 and 24,500, while put positions have shifted lower to the 22,000–23,000 range.

Based on the current positioning, the brokerage expects Nifty futures to trade within a broad range of 22,000 to 24,000 in the coming week.

With IANS inputs