Market Overview Report: Indian Stock Market (Nifty50 and Bank Nifty)

Market Recap

The Indian equity market experienced significant volatility as the benchmark Nifty50 index fell sharply, marking a turbulent beginning to the new Samvat. Key highlights from today's session include:

• Nifty50 dropped approximately 500 points intraday to a fresh four-month low, eventually closing 309 points lower at 23,990.30, down 1.29% for the day.
• Sensex also declined 941.88 points (1.18%), closing at 78,782.24.
• The Nifty Energy index led the sectoral losses, falling by 2.72%, while Nifty Realty and Nifty Infra also declined by 2.9% and 2.2% respectively.
• India VIX, a measure of market volatility, spiked by 5.03% to 16.70, signaling increased investor anxiety.

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Technical Analysis

1. Nifty50:

   • The index has experienced a breakdown from its five-day consolidation pattern, suggesting the continuation of a downtrend.
   • Key resistance zones are positioned at 24,200 - 24,400, while crucial support is at 23,900 - 23,800.
   • A breakdown below 23,500 could trigger a deeper correction towards the 23,450 - 23,400 zone.
   • A move above 24,100 may indicate a potential relief rally towards 24,500.

2. Bank Nifty:

   • Bank Nifty experienced a sharp decline but stayed within its 52,000 - 51,000 range.
   • Crucial support for Bank Nifty lies between 50,720 - 50,600, with resistance around 51,750 - 51,800.

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Derivative and Sentiment Indicators

• The market sentiment remains weak due to oversold technical indicators; however, any signs of stability could provide a relief rally.
• The India VIX moving toward the 17 level indicates elevated volatility, warranting a cautious approach.

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Global Cues and Macro Influences

The sell-off was triggered by both domestic and international concerns:

• US Presidential Election: Investor anxiety is high with the US election scheduled for November 5. Potential delays in results are causing unease.
• Federal Reserve Policy: A rate cut of 25 bps is anticipated in the upcoming policy announcement, but disappointing US jobs data and recent layoffs add to concerns.
• Inflation and Employment Data: The October jobs report is expected to show a decrease, potentially fueling the Fed’s decision to maintain or lower interest rates. The Boeing strike and Hurricane Milton’s impact are expected to weaken job figures.

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Fundamental Outlook

• High market valuations and weak Q2 earnings have made the Indian market vulnerable to global sell-offs.
• Anticipated volatility may persist in the near term, driven by global macroeconomic events such as policy decisions from the US Federal Reserve and Bank of England.

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Conclusion and Strategy

With heightened volatility expected, it’s recommended to adopt a stock-specific approach while staying cautious about broad market positions. Attention to key support and resistance levels is crucial for navigating the current market:

• Nifty50 Support: 23,900 - 23,800 (key short-term support) and 23,500 (crucial breakdown level).
• Nifty50 Resistance: 24,200 - 24,400 with a pivotal resistance at 24,500 for potential recovery.
• Bank Nifty Range: 52,500 - 50,500 with a downside bias.

Market participants should remain cautious and stay light on positions, considering the potential for further corrections or consolidation.