Analysts expect a knee-jerk reaction followed by range-bound trade unless the index breaks key levels around 24,400 or 24,750.
Nifty 50 remained under pressure on Wednesday, closing below 24,600, and slipping below the important 100-day Exponential Moving Average (EMA). The sentiment turned cautious after the Reserve Bank of India (RBI) decided to keep interest rates unchanged in its policy meeting on August 6, but with a tone that showed concern about inflation — especially from rising food prices.
Overnight, US President Donald Trump signed an executive order implementing an additional 25% tariff rate on India due to its purchase of Russian oil. This means many Indian goods heading to the US could now face a total 50% duty, effective August 27.
Indian markets brace for weakness as the SGX Nifty indicates a gap-down start on Thursday as it heads into the weekly expiry session.
Trump Tariff Impact On Markets
SEBI-registered analyst Arun Mantri noted that the Nifty will likely see a knee-jerk reaction to Trump’s additional tariff announcement on Thursday and find a bottom around 24,400-24,450, which aligns with the lowest levels seen in May.
However, the latest tariff, which effectively doubles duties on many Indian exports to the US to 50%, will take effect after a 21-day window. And this opens a negotiation window for India, according to him. Given this scenario, markets are likely to shift their focus more towards domestic factors and may start to discount foreign trade shocks after this initial knee-jerk reaction.
Overall, Mantri suggested that the 24,400 area is a key technical support expected to hold in the current week.
Market: What Next?
Analyst Pradeep Carpenter noted that the Nifty couldn’t cross 24,650, which is acting like a ceiling, and buyers were defending the 24,500 zone. This indicates that the index is resting between two key zones. A break above 24,650 could lead to a rally, and a break below 24,500 could invite further correction. For the Bank Nifty, if it rises above 55,570, it could see more upside, but a drop below 55,200 would lead to intense selling.
He also highlighted that the fear index (India VIX) was low at 11.96, suggesting that investors were not very worried. But the lack of strong buying shows that traders were playing it safe and waiting for a decisive break.
Heading Into Weekly Expiry Session
Analyst Mayank Singh Chandel noted that the Nifty is forming a clear lower-high, lower-low pattern, suggesting weakness. The 20-day EMA is close to falling below the 50-day EMA, which could invite more selling pressure if confirmed. Additionally, the momentum remains weak with the Relative Strength Index (RSI) stuck below 40, reflecting a lack of buying interest.
He believes that a breakdown below the June low of 24,473 may trigger further selling. The next key support lies at 24,200 (200-day EMA), and if the fall continues, Nifty could test 24,000 and even 23,800 in the coming sessions. On the upside, immediate resistance is placed at 24,650. The crucial resistance zone remains between 24,750 and 24,800, where selling pressure has previously emerged.
Derivatives data points toward a likely range-bound move between 24,400 and 24,700 in the near term, unless a breakout or breakdown occurs.
Chandel concluded that a fall below 24,473 could lead to deeper cuts, while a move above 24,750 is needed to bring stability back into the market. He advised traders to remain cautious and watch these levels closely for a breakout in either direction.
Bharat Sharma of Stockace Financial Services flagged that the 100-day EMA support has weakened, making it more likely that the market could move further down if bullish investors begin to retreat. However, bulls are trying to defend the ultimate support between 24,500 and 24,450.
With the weekly expiry session on Thursday, Sharma identified immediate support at 24,540, which, if breached, could drop to 24,500-24,450, followed by intense selling. On the upside, resistance is seen just above 24,600. A recovery from here could see the Nifty rise to 24,680, 24,730, 24,800 and above.
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