Geopolitical Overhang: Operation Sindoor Pressures Sentiment
The Indian market is expected to open weakly on Tuesday's trade as Nifty 50 and Sensex are expected to open weakly on Tuesday's trade amidst rising geopolitical tensions between India and Pakistan and mixed global cues.
Early signs from the Gift Nifty, that was trading around 24,359 — close to 72 points off Nifty futures' last close — indicate a not-so-bright opening for local indices.
Market sentiment is likely to continue under stress after the Indian Armed Forces carried out 'Operation Sindoor', where nine terrorist infrastructure targets in Pakistan were reportedly hit. This unexpected escalation is likely to be a heavy burden on investor sentiment.
Previous Close Snapshot (May 6) :
- Sensex closed down 155.77 points at 80,641.07
- Nifty 50 fell 81.55 points, closing the session at 24,379.60
Both the indices showed weakness with bearish formations appearing on the charts.
Sensex Outlook: 81,000 is the Crucial Resistance :
Technical analysts identify that Sensex is operating in a weak region, at least as long as it remains below 81,000. Opines Shrikant Chouhan of Kotak Securities:
If the index cannot regain 81,000, it might test 80,300, and a more extensive correction might push it towards 80,000. Conversely, a strong move above 81,000 might take it to 81,300–81,400." He also advised traders to take levels-based trade in a non-directional market environment.
Nifty 50 Technical View: Rising Wedge Signals Weakness
Nifty 50's development of bearish engulfing pattern and rising wedge on the daily charts is an indication of short-term reversal.
Highlights:
- A fall below 24,200 can lead to a downward correction.
- A breakout above 24,600 would negate the bearish setup in the near term.
- Support levels: 24,250, 24,200, 24,180
- Resistance levels: 24,530, 24,590, 24,640
Nagaraj Shetti of HDFC Securities observes that market breadth is weak, and the failure of the index to make upside momentum is noteworthy. Om Mehra of SAMCO Securities further commented:
"Nifty has breached a trendline on an hourly chart and dipped below the 9 EMA. A dip below 24,240 could have it losing short-term support. The RSI is still neutral around 65."
While that, India VIX increased 3.60% to 19, indicating increasing fear in the market. If it crosses 21, more volatility and downside would be anticipated.
Bank Nifty: Bearish Bias as Key Supports Break :
The Bank Nifty index declined by 648 points on Tuesday at 54,271.40 and closed, and registered a bearish candle on the daily chart — another indication of increasing weakness.
Technical Breakdown:
- Fell below 9 EMA and crucial swing low at 54,175
- Broken 23.6% Fibonacci retracement level at 54,460
- Subsequent major support: 53,400 (also coincides with 20-day SMA and 38.2% Fibonacci retracement)
- Resistance points: 55,000, 56,000
Om Mehra pointed out that the MACD is reflecting bearish crossover, which means dip in momentum. But he stressed that the main trend is still bullish, and this fall would be a normal correction, rather than a long-term trend reversal.
Hrishikesh Yedve of Asit C. Mehta Investment reflected a similar cautious approach: "Traders must follow a sell-on-rise policy in Bank Nifty unless it breaks above 56,000 convincingly."
Swing Traders Take Note:
VLA Ambala, Co-Founder of Stock Market Today, recommended swing traders to wait for deeper dips before taking fresh long positions, particularly in the wake of increased geopolitical risks and chart-based indications of near-term downside.
Bottom Line:
The Indian share market is preparing for a choppish to weak session on May 7, amidst growing geopolitical tensions, technical indications of weariness, and higher volatility. Traders need to tread with caution, monitor key support and resistance points, and steer clear of aggressive bets until a distinct trend re-emerges.
Disclaimer: The views are those of individual analysts and brokerage houses. Investors should consult a certified financial advisor before taking any investment decision.
