Pressure Mounts on Nifty 50 Amidst Global Sentiment and Weak Earnings Expectations. Experts believe the index could fall to 20,000 if Q4 results remain weak.
Stock Market: The recent downturn in the Indian stock market has fueled investor concerns. Amidst Donald Trump's tariff policy and global market sell-offs, the question arises – could the Nifty 50 index fall below 20,000? Experts suggest there's no immediate need for panic, but the future direction hinges on Q4-FY25 corporate earnings and guidance.
Strong Support at 21,000, Market Volatility Persists
According to Nandish Shah, Deputy Vice President at HDFC Securities, the Nifty might find support around 21,000. He stated that the negative news related to Trump's tariff policy is already priced into the market. Therefore, Indian markets have shown better resilience compared to the global decline.
Global Sentiment, Not Market Weakness, is the Primary Driver
Shah believes the current decline doesn't signal weakness in the Indian economy or companies, but rather reflects the prevailing global sentiment. If Q4 corporate earnings are weak, the Nifty could fall to 20,000, but this is not the base case scenario.
Sharp Recovery Despite Persistent Short-Term Risk
On Tuesday, the Nifty rallied by 300 points (1.4%), closing at 22,475. However, this followed a sharp drop of 742 points (3.24%) on Monday. This clearly indicates that short-term volatility persists in the market.
Market in Downtrend for Six Consecutive Months
The Indian stock market has been underperforming for the past six months. In September 2024, the Nifty reached an all-time high of 26,277, but by April 7th, it had fallen by approximately 17.3%. The index has declined by 2,100 points in the last 9 trading sessions.
What do Resistance and Support Levels Indicate?
Ajit Mishra of Reliance Broking believes the Nifty will face resistance between 22,500 and 22,800. If the index closes below 21,700, it could fall to 21,300. Technical charts (RSI, MACD, Stochastic) also indicate market weakness.
Potential for Medium-Term Decline to 19,700?
The Nifty is currently at its 100-Week Moving Average (22,145). If this level breaks, the next support could be around the 200-WMA, which is approximately 19,700. The monthly chart also shows Super Trend support at 21,500; a breach could send the Nifty down to 19,500.
Increased Risk of Decline Due to Unfilled 2023 Price Gap
In December 2023, the Nifty left a price gap between 20,291 and 20,508. Historically, the Nifty tends to fill these gaps over time. Therefore, a move below 20,291 is considered likely.
