Indian markets slipped sharply on Tuesday, with benchmark indices ending about 1% lower. With the 50% U.S. tariff on Indian goods coming into effect on Wednesday, SEBI-registered analysts on Stocktwits discussed its impact on equities and highlighted key levels to watch.
Thursday’s trade setup
Nifty is placed at 24,712 with support at 24,480 and resistance at 24,920, while Bank Nifty stands at 54,450, with support at 53,800 and resistance at 55,000, as per SEBI-registered analyst Prabhat Mittal.
Tariff Impact
Tuesday’s market action was nothing short of “drastic and unpredictable”. Our earlier analysis had maintained a positive bias, but the sudden collapse, triggered right from the pre-open session and accelerating after the market opened, took us by surprise, said SEBI-registered analyst Bharat Sharma.
The biggest factor behind this decline was the implementation of additional US tariffs on Indian exports, effective August 27, Sharma said.
From today, a 50% tariff applies to shipments to the US, and markets were clearly hoping for either a rollback or an extension. With no such relief announced, sentiment turned sharply negative.
Adding to the pressure, foreign institutional investors (FIIs) stepped up heavy selling, amplifying weakness across the board. The technical picture worsened as key support levels were breached in the initial gap-down, sparking immediate fear among traders, he added.
Looking ahead, focus shifts to the monthly Nifty expiry.
FII Watch
Interestingly, foreign institutional investors (FIIs) have not been building aggressive short positions in the market over the past two sessions, noted SEBI RA Arun Mantri.
The data suggests that their short exposure remains limited, which in turn indicates that the downside risk for the markets may also be capped for now. Thursday’s session should provide clearer cues on whether this trend holds or shifts, he added.
Volatility Ahead
The market is expected to remain volatile in the coming weeks, which could present selective investment opportunities, according to SEBI-registered Sharpely.
Instead of chasing momentum broadly, investors may benefit from focusing on pockets of the market backed by strong earnings performance, the analyst added.
The latest relative rotation graph (RRG) highlights how different sectors are positioned. Notably, several indices in the leading quadrant are supported by robust Q1 earnings, making them relatively attractive in the current environment.
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