The Nifty 50 index is currently facing significant challenges, continuing its downward trend for five consecutive sessions leading up to February 12, 2025. After witnessing sharp declines earlier, the market is currently trading around 23,071.80, having lost over 310 points or 1.32% on February 11. Analysts note this persistent weakness is partly due to negative sentiment following recent market performances and disappointing earnings from key sectors.
On February 11, the Nifty 50 trend reflected continued sell-offs, primarily influenced by foreign institutional investors (FIIs), who have offloaded equities worth approximately ₹1 lakh crore since the start of the year. A notable observation made by Hardik Matalia, derivative analyst at Choice Equity Broking Pvt., highlighted, "The market remains highly volatile. On the downside, 23,000 serves as a key support level, and a break below this mark could trigger..." This sentiment reinforces the urgency for market watchers to keep vigilant about the support levels.
Broad market indices are reflecting concerns; for example, 84% of stocks within the Nifty 500 index have slipped below their respective 200-day moving averages. The decline isn't limited to large-caps; both midcaps and smallcaps are grappling with significant downturns, with the Nifty Midcap 100 index reducing by over 3% to reach its lowest point since June 2024. The Nifty Smallcap 100 has also faced similar fates, dropping by 3.5% and nearing its 52-week lows.
Prashanth Tapse from Mehta Equities commented on the current challenges facing mid and small-cap companies, stating, "Mid and small-cap companies have reported weaker-than-expected growth... resulting in sell-off or profit-booking by all types of investors. Valuations were elevated, and the correction was inevitable." This indicates growing investor caution as these segments respond to market shifts.
From a technical perspective, the Nifty 50 chart has shown signs of detrimental patterns, with recent trading forming what analysts describe as long bearish candles. This pattern has decisively broken the previously viewed support level of 23,400, which, according to Nagaraj Shetti of HDFC Securities, signifies the prevalence of strong downside momentum. He reaffirmed, "The larger degree bearish pattern like lower tops and bottoms is visible on the daily chart and the Nifty is now sliding down to form a new lower bottom below the swing low of January at 22,786 levels." This technical analysis could provide pessimistic projections for traders watching for potential recoveries.
Looking forward to February 12, it becomes evident where the resistance and support lines lie. Analysts at LKP Securities highlighted targets for immediate resistance at around 23,200, with strong resistance noted at 23,300. Conversely, if the index falters below the current support of 23,000, there is speculation from tech experts about additional declines to lower levels around 22,800.
Despite the recent downturn, there are hopes for recovery. Analyst Rupak De stated, "After meaningful correction, the proximity to the falling wedge support could provide reason for recovery." Yet, with current volatility high, he advised traders to maintain strict stop-loss measures and avoid overnight positions. This highlights the cautious optimism permeated within recent expert analyses, serving as guidance for both retail and institutional investors alike.
The current trading environment underlines the challenges prevalent across the board, where volatility may dominate market sessions. The closing on February 11 marked the lowest point this month, indicating potential corrections deepening without swift reversals. All eyes will remain on the Nifty for direction, but securing positions at or below key levels will be pivotal as the market opens on February 12. Given the heightened market drama, traders will work strategically, focusing on trades within defined ranges to navigate this tumultuous trading day appropriately.