Stock market crash: Sensex tanks over 4000 points this week. Can Nifty 50 save 23,250 support or more pain ahead? | Stock Market News

Stock market crash: Following the hawkish US Fed outlook on the interest rate cut and FIIs’ selling, the Indian stock market snapped its four-week winning streak. The key benchmark indices erased their four-week gains in the week gone by. The Nifty 50 index slipped from 24,768 to 23,587, logging a weekly loss of 1,181 points. The BSE Sensex crashed from 82,133 to 78,041 levels, recording over 4,000 points loss last week. Likewise, the Nifty Bank index crashed from 53,583 to 50,759, logging a weekly loss of 2,824 points last week. 

In this stock market crash, the Nifty 50 index broke below its 200-DEMA support, placing at 23,800, which may have boosted the morale of Indian stock market bears. In this bear-hit market, the Nifty 50 index is close to its recent swing low of 23,250, and bets are high on whether this support will remain sacrosanct or the 50-stock index will touch a new low.

Why is the Indian stock market falling?

According to stock market experts, bears had the opportunity to paint the Indian stock market red ahead of Christmas due to the hawkish US Fed outlook on interest rate cuts. This strengthened the US dollar rates, which triggered buying in the bond and currency markets. They said that FIIs’ selling is another reason for the DII sentiments for bottom fishing not to be fueled.

Speaking on the reason for the stock market crash last week, Mahesh M Ojha, AVP — Research at Hensex Securities, said, “The global cues turned weak after the hawkish guidance by the US Federal Reserve. This strengthened the US dollar in the FOREX market, leading to fresh buying in the bond and currency market. So, FIIs’ selling further intensified as DIIs remained mere expectations due to the uncertainties of the post-weak earnings season. DIIs are waiting for the Union Budget 2025; hence, they are expected to remain a silent player.” He said that falling rupees lead to macroeconomic concerns and uncertainty over the recovery post-weak earnings season. These are other significant reasons for not allowing the DIIs to start bottom fishing.

What next after a stock market crash?

Speaking on the outlook for the Nifty 50 index, Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher, said, “The Nifty 50 index continued to tank with weak bias to end the week below the important 200 period MA of 23,800 zone and snaps 4-week gaining streak closing near the 23,600 zone. The 50-stock index has witnessed a short period of correction from the 24,850 zone and has the next important support of the previous low made near the 23,250 zone, below which the overall trend would turn bearish.”

On the outlook for the Bank Nifty index, Vaishali Parekh said, “The Bank Nifty index extended the losses to lose more than 800 points and has arrived near the significant 200-period MA of 50,500 levels, below which the overall bias would turn weak. The next major support lies near the previous bottom, which was made near 49,800 levels, below which the trend would turn bearish. Afterwards, one can expect further intensified selling pressure in the coming days.”

Is trend reversal around?

Expecting the Indian stock market to remain highly volatile on Monday, Osho Krishnan, Sr. Analyst — Technical & Derivatives at Angel One, said, “From a technical standpoint, as Nifty slipped below the pivotal zone of 200 SMA, the next potential support could be seen around the recent swing low around 23,200 to 23,100 mark, while a decisive breach is likely to open further downside towards 22,800 in the near period. The formation of a strong Bearish candle on the weekly chart certainly showcases a turnaround move, with bounces to be seen as opportunities to exit longs. As far as resistance is concerned, 23,800 to 24,000 is likely to be seen as an intermediate hurdle, followed by 24,150 to 24,300 levels, coinciding with the bearish gap and the cluster of EMAs on the daily charts for the upcoming truncated week.”

Osho Krishnan of Angel One advised investors to approach markets with proper risk management and refrain from taking complacent bets for the time being.

Sectors to look at for bottom fishing

On sectors that may fuel trend reversal on Dalal Street, Aditya Gaggar, Director of Progressive Shares, said, “The IT sector did correct, but the underlying positive trend has not yet changed, and we believe sooner or later, the sector will move with its primary uptrend. The pharma sector has shown a breakout from a falling channel pattern. Still, we await confirmation of the upcoming week’s activity (Dr Reddy-Falling Channel Breakout, Lupin-Forming a Bullish Flag and Pole pattern).”

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.