On the first day of the October series, the Nifty saw gradual buying in the first half of the session, but the recovery failed to sustain. The index came under sharp selling pressure in the second half, suggesting that bearish sentiment remains dominant. The Nifty closed 0.42% lower and continued to trade near its six-month low.
Among Nifty constituents, ICICI Bank and Kotak Mahindra Bank were the top gainers, while Apollo Hospitals and Max Healthcare Holdings saw the sharpest declines.
Sectorally, the market remained mixed. The Nifty Healthcare and Nifty Pharma indices declined sharply, while Nifty Realty and Nifty Private Bank saw some relief buying. Nifty Media outperformed, supported by buying interest.
The broader market ended largely flat, suggesting a pause following the recent steep decline.
Analysts expect the market to remain cautious in the near term, although they see relatively limited downside from current levels after the seven-week correction led to a meaningful reset in valuations.
However, elevated crude oil prices and continued selling by foreign institutional investors are likely to keep sentiment subdued.
Nagaraj Shetti of HDFC Securities said the underlying trend for the Nifty remains negative. According to Shetti, a break below 22,500 could lead to a further decline towards 22,200-22,100 in the near term, while any rebound is likely to face resistance around 22,800.
Sudeep Shah of SBI Securities said the 22,550-22,500 zone could act as immediate support. A decisive break below this range could trigger fresh selling towards 22,350, while 22,790-22,810 is likely to act as an immediate hurdle on the upside.
A sustained move above this zone could extend the pullback towards 22,950, although Shah said the broader market structure remains weak and sustained buying would be needed for a meaningful recovery.
Rupak De of LKP Securities said market sentiment remains weak, with higher crude oil prices and the 10-year US Treasury yield weighing on bullish sentiment.
De said the Nifty once again faced resistance at higher levels and formed a high near the 20-period exponential moving average (EMA) on the hourly chart before declining towards the end of the session.
He identified 22,600 as a crucial support level, with a decisive break below it potentially triggering a sharper correction. Conversely, sustained trade above 22,600 could support a meaningful recovery.
Shrikant Chouhan of Kotak Securities said, “We believe that 22,600-22,550/72,400-72,200 remains a strong support zone for day traders. If the market manages to hold above this zone, it could retest 22,750-22,800/72,800-73,000. On the other hand, a break below 22,550/72,200 could accelerate selling pressure, potentially dragging the market down to 22,400-22,350/71,800-71,600.”