Indian equity benchmarks showed resilience on Tuesday, paring some losses as the NSE Nifty50 index staged a recovery from its day's low during the monthly expiry session. The index had initially dipped below its crucial 200-week moving average (200-WMA), a level historically breached only during significant financial shocks like the 2008 Global Financial Crisis and the 2020 Covid-19 pandemic.
Nifty recorded a low of 22,569.65, falling below the 200-WMA level of 22,607. However, it managed to rebound, trading at 22,659.60 by the close, marking a 0.53% decline or 120.65 points from its previous close. This recovery was largely attributed to strong buying interest observed in frontline banking counters.
Analyst Insights on Nifty's Recovery
Sudeep Shah, Vice-President - Technical and Derivatives Research at SBI Securities, noted the strong recovery in benchmark indices. "The frontline indices witnessed a strong recovery on the monthly expiry day, supported by India VIX cooling below the 14 mark. Despite heightened volatility and a negative start to the session, Nifty staged a smart rebound from lower levels, led by strong buying in frontline banking counters," Shah stated.
Among the sectoral indices, Nifty Pharma emerged as the top performer, while Nifty Consumer Durables recorded the steepest losses.
Key Support and Resistance Levels
Shah identified the 22,540-22,560 zone as a crucial support level for Nifty. Should the index fall below 22,540, the next support is projected between 22,370 and 22,390. On the upside, resistance is observed in the 22,850-22,870 range. A decisive surge above 22,870 could potentially extend the rally towards the 23,020 mark.
Regarding options activity, Shah highlighted significant call writing across the 22,800 and 22,900 strikes, indicating investor expectations of resistance at these levels. On the put side, the 22,700 strike, followed by 22,600, showed substantial open interest, suggesting strong support.
Sensex Performance and Broader Market Influences
The 30-share BSE Sensex also experienced a similar trajectory, slipping to 72,064.24 in early trade before recovering to 72,380.77, down 390.95 points or 0.54 per cent. For Sensex, Shah pinpointed support at 72,100 and resistance at 73,000.
Domestic benchmark indices have been under pressure recently, with investors closely monitoring global factors such as crude oil prices, movements in the US dollar, global bond yields, and foreign fund flows, all of which continue to influence market sentiment.