Following the 23,800 hurdles, the market formed an evening star candlestick pattern and showed weaker data, including negative FIIs data. Additionally, the decline in Asian markets contributed to today’s nearly 1.50% drop, with the market likely closing around 23,165.70.
Today, the market opened with a bearish tone but later recovered all the lost points, making a positive upward move after an initial decline of nearly 150 points. However, as a few consecutive 5-minute candles expanded over the next 6 to 7 candles, the market saw a steady decline from the 23,520 level to the 23,135 level. During this period, the market experienced a sharp downside movement and eventually closed near 23,165.
Global market analysis
As stated by US President Donald Trump, tomorrow is expected to be a “Liberation Day.” Trump is set to announce a reciprocal tariff policy on a global scale. This has been a sensitive issue for the past few months, as market analysis indicates significant fluctuations in response to such developments.
The actual impact remains uncertain, but reports suggest that a 25% tariff could be announced or something similar, though the exact details are yet to be confirmed. Tomorrow will be crucial in determining how these policies will shape the market’s future.
Now, this situation is gaining importance because the European Union has stated that if Trump announces tariffs on EU products, they will definitely retaliate. This is a key concern because if the EU follows through with its response, it could provoke a strong reaction from Trump, potentially escalating tensions further.
Such a scenario could create a highly volatile economic situation and disrupt global markets. As a result, all eyes are on how these developments will unfold.
Eurozone inflation data
A positive development is emerging from the European economy as inflation is coming down. This decline supports the European Central Bank (ECB) in lowering interest rates, which is a positive step for both the economy and the stock market.
The latest data shows that the forecasted inflation rate was 2.2%, and the actual figure has matched this expectation at 2.2%. This is a promising sign, as the ECB’s target is around 2%, indicating that inflation is aligning with their goal. This achievement is likely to boost the confidence of central bank members in considering interest rate cuts in the near future.
Also read; Foreign Investment; importance, types and Negative impact of foreign investment
Domestic market analysis
Recently, a report suggested that China is prepared to increase its imports of Indian products due to the ongoing tariff war. This move is a positive development for both countries. Additionally, a significant diplomatic event took place as President Droupadi Murmu and Chinese President Xi Jinping met and congratulated each other on the 75th anniversary of diplomatic relations. This marks a meaningful step in strengthening ties between the two nations, gradually fostering positive economic and diplomatic impacts.
The upcoming monetary policy meeting next week has already sparked a positive response from banks, as there is a high probability of a 25-basis point cut in the current interest rate. This would be a positive move for the banking sector, especially since the RBI had also lowered interest rates in the previous meeting. Such cumulative measures are expected to support market growth, benefiting both the NBFC and banking sectors.
Additionally, amid ongoing tariff concerns, commodity prices—particularly gold and silver—have been rising consistently. This trend presents a strong opportunity for equity traders and a favorable environment for commodity traders, as they continue to see increased gains.
FII&DII activity and Option chain analysis
FII&DII activity
As the new financial year begins in India, FIIs remained net sellers, offloading nearly ₹5,901.63 crore. This continues a pattern observed over the past six months, where FIIs have been net sellers on the first trading day of each month. This trend is crucial, especially with the upcoming tariff-related developments, which could pose challenges for the market. The key focus will be on how FIIs react in the current scenario and how both FIIs and domestic investors (DIIs) contribute to the Indian equity market in the coming days.
Option chain analysis
After putting significant pressure on put writers, the market is now at a crucial point. There is not much volume in the nearby contracts, but looking at the key levels, 23,300 is the most significant level, with the highest open interest in call options, totaling nearly 98,995 contracts. Another resistance level is at 23,400, where there are around 5,826 contracts, creating two key resistance zones dominated by call writers.
On the support side, 23,000 is a crucial support level, as it has 98,912 contracts, making it a strong support point. This level will be important to watch for any potential downside movement.
Nifty 50 Prediction for trade setup
As we approach the event we’ve been discussing for the past month, the market has been experiencing ups and downs. Yesterday, the market saw a significant fall. If we analyze the current situation, the 23,000 level appears to be a crucial support, as it aligns with both a key moving average and strong put option interest. This level has shown strong support in the past, making it an important zone to watch.
Given the current market dynamics, the 23,000 level will be a critical point. If the market falls below this level, it could signal potential danger or increased volatility in the near future, making it a sensitive level for upcoming market movements.
Conclusion
As we are in a tariff situation, our focus should be on observing the markets. Additionally, we need to understand the impact of the tariffs, which sectors could be affected, and assess the market in detail. There is potential for tariffs to have a positive effect on certain areas. This will be important to monitor, especially in terms of how consistently tariffs influence the management’s mindset and the future strategies of companies within those specific sectors. We will focus on observing these developments in the coming trade setup.
