Market Breakdown: What’s Next for Nifty & Bank Nifty?

StockEdge's Morning Market Analysis – 12th Feb 2025

Nifty 50 lost 309 Points on Tuesday, Closed at 23,071

• The Nifty 50 yesterday broke down its key support level of 23,350.
• Market breadth remained in favor of the bears with 46 stocks advancing and 4 declining.
• The Dow Jones traded positively yesterday, and the Dollar Index has again inched up to 108+ levels. The FIIs were net sellers, offloading around ?4,486 Cr.

Technical Outlook

Bearish bias persists unless Nifty reclaims 23,300 convincingly. MACD is below the zero line, with the signal line crossing downward, confirming bearish momentum. Bearish crossover suggests further downside pressure.

Key Levels to Watch

• Immediate Support: 23,000 zone (aligned with the lower Bollinger Band).
• Next Support: 22,800, a recent swing low.

Resistance Levels:

• 23,300 (20-SMA) – A critical level to regain for any bullish reversal.
• 23,700-23,800 (50-SMA and prior resistance zone).

A breakdown below 23,000 could push Nifty towards 22,800-22,600, while any upside move should be watched for rejection near 23,300-23,700.

Sectoral Performance

All major sectors ended in the red.

Midcap and Smallcap indices took a heavy hit:

• BSE Midcap index down 3.18%
• BSE Smallcap index down 3.61%

Investor sentiment was impacted by U.S. tariff policies, particularly President Donald Trump's decision to raise tariffs on steel and aluminum imports to 25%, along with plans for additional tariffs on other countries.

Nifty Bank Performance

The Nifty Bank Index closed at 49,403.40, down 1.16% (-577.60 points).

• Key Resistance: 50,600-50,900 zone, where 50, 100, and 200-day SMAs converge.
• Key Support: Price is approaching 49,200-49,300. A breakdown could lead to further downside towards 48,500-47,900.

Momentum Indicators:

• RSI indicates weak momentum.
• MACD bearish crossover suggests fading bullish strength.

If 49,200 doesn’t hold, expect further declines. For any bullish reversal, Nifty Bank must sustain above 50,600.

Overall Market Sentiment

The combination of global trade uncertainties and lackluster domestic earnings contributed to the day's market decline.

Traders and investors should exercise caution due to weak momentum and bearish signals in both Nifty 50 and Nifty Bank. The indices are struggling below key moving averages, indicating resistance at higher levels.

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