Indian equity markets are poised for a cautious start on Thursday, taking cues from a sharp overnight sell-off on Wall Street. Global investors turned risk-averse, booking profits in high-flying technology and artificial intelligence (AI) stocks, casting a shadow over Asian bourses, including India.
Global Rout Triggers Valuation Reset
The S&P 500, Nasdaq, and Dow Jones extended their losing streak, driven by a visible rotation away from growth sectors. The sentiment was dampened by renewed skepticism about the returns on massive AI-related capital expenditure and reports of potential pullbacks in data-centre investments. This prompted a shift towards more defensive sectors.
Further caution prevails as the market awaits the crucial US consumer price inflation data, which will heavily influence the future trajectory of monetary policy. The divided views on interest rates have led participants to adopt a defensive stance and avoid aggressive bets.
While the selling pressure is expected to spill over to Indian equities, analysts suggest this is not a panic-driven move. Instead, it appears to be a valuation-led reset following a strong rally, rather than a sign of any structural breakdown in the market.
Nifty and Bank Nifty: Key Levels to Watch
Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, noted that the market sentiment has weakened. The Nifty 50 index closed near the 25,800 mark, hovering close to its critical 50-day exponential moving average (DEMA) support around 25,750.
"If the 50-stock index breaks below this support, it may attempt to test the 25,500 to 25,400 levels," Parekh stated. On the upside, the index faces a significant hurdle at the 26,000 level. A decisive close above this point is needed to restore bullish conviction.
Regarding the Bank Nifty index, Parekh observed that it continues to trade in a tight range, resisting near the 59,150 zone. "A decisive breach above the 59,500 zone is much needed to expect a fresh upward move, targeting 60,000," she added. The crucial near-term support for the banking index is placed at its 50-DEMA level of 58,300.
Parekh highlighted that the immediate support for the Nifty is at 26,000, while the Bank Nifty is expected to see a daily range between 58,500 and 59,500.
Intraday Stock Picks from Vaishali Parekh
For traders looking at opportunities in Thursday's session, Vaishali Parekh recommended three stocks for intraday trading:
- GNA Axles: Buy at ₹307, target ₹320, stop loss ₹300.
- Grasim Industries: Buy at ₹2805, target ₹2850, stop loss ₹2770.
- ONGC: Buy at ₹232, target ₹243, stop loss ₹228.
Investors are advised to monitor the global cues and key domestic support levels closely, as the market navigates through this phase of consolidation and valuation adjustment.
