Sensex falls 300 points, Nifty below 24,350. Here’s why analysts see range-bound trade

The Indian stock market traded in the red on Friday, with Sensex and Nifty continuing to remain range bound despite oil prices stabilizing at around $87 per barrel.

Sensex fell over 300 points to 77,762 while Nifty 50 fell 68 points to 24,328 on Friday. Broader markets remained muted, with Nifty Midcap 100 and Nifty Smallcap 100 recording marginal gains and losses.

UltraTech Cement and Tata Steel shares dropped more than 1% each to lead losses on Sensex, while IndiGo, Trent, Asian Paints, Power Grid, Axis Bank, NTPC, HCLTech, M&M, ITC, Maruti Suzuki and others fell around 1% each to follow. Bucking the trend, Bajaj Finance, Eternal and Titan shares were trading in the green with marginal gains.


Among the sectors, Nifty Metal fell over 0.6%, while Nifty Auto dropped 0.4%. The overall market breadth however was positive, with NSE seeing 1,364 advances against 1,126 declines, while 107 stocks remained unchanged.

What lies ahead for Dalal Street?

The range bound nature of the market is likely to continue in the near-term, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. He noted that Nifty has been consolidating between 23,800 and 24,400 without any triggers for a breakout above the upper band or a breakdown below the lower band. Nifty was poised for a breakout above the upper band, but this was foiled by a spurt in crude to above $91 triggered by the absence of an expected deal between US and Iran.

Now Brent crude has cooled off to below $87, which is a mild positive for the market, the analyst noted. He added that even though FPI selling has tapered out and they had turned buyers recently, a clear trend in FII activity is yet to emerge. Major activity is now centred around the mid and small-cap space and this trend is likely to continue, he said, adding that select private sector banks offer value buying opportunities for the long-term.

Technical view on Nifty

Nifty’s hammer formations in the last two days after 20 DMA stepped in to arrest downside attempts, point to bargain hunting, despite the lack of risk appetite to chase prices higher, said Anand James, Chief Market Strategist, Geojit Investments. He added that oscillators continue to stay accommodative towards an upside move, aiming 24,540-24,666 initially, followed by 24,850-25,100.

“But, given the last two days’ swings, it is essential to keep the downside marker near 24,329-24,240,” the analyst said, explaining the technical charts.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)