Indian equity benchmarks shares closed on Friday, 15th, 2024, with the Sensex shedding 454 points and the Nifty closing at 22,023, as caution towards mid- and small-cap stocks continued to dampen broader market sentiment. However, market experts remain optimistic about a potential rebound, citing moderating global commodity prices and an upward revision of India’s GDP forecast for the fiscal year 2025 as tailwinds that could highlight robust domestic demand.

BSE Sensex Retreats Amid Market Volatility

The BSE Sensex experienced a significant decline, shedding 453.85 points (0.62%)  to close at 72,643.43. This downward movement reflects investor sentiment and the prevailing market conditions. The index opened at 72,657.57 and fluctuated throughout the trading session, reaching a high of 72,776.94 and a low of 72,509.31 before settling at its closing level.

When compared to the previous day’s close, the Sensex’s performance indicates a bearish trend in the market. However, it is important to note that the index remains within a reasonable range, with the 52-week high of 74,245.17 and the 52-week low of 57,084 zone, suggesting potential for recovery or further declines depending on various economic and market factors.

Overall, the Sensex’s decline of 453.85 points represents a notable correction in the Indian stock market, potentially influenced by domestic and global cues. Investors will need to closely monitor the market’s trajectory for any signs of stabilization or further volatility in the coming trading sessions.

Technical Perspective: Nifty Faces Crucial Support

From a technical standpoint, the Nifty has once again closed below the rising trendline, a move that Rupak De, Senior Technical Analyst at LKP Securities, suggests could bring market sentiment back into a state of weakness. He notes that the momentum indicator signals bearish momentum in the near term, with immediate support situated at the 50-day moving average, currently at 21,900.

A drop below the 21,900 support zone  could lead to a sharp decline in the index and on the upside, the trendline resistance is observed at the range of 22,200 zone.

Anticipating a Rebound in Mid and Small-caps

While caution towards mid and small-cap stocks persists, Vinod Nair, Head of Research at Geojit Financial Services, expects a rebound in these segments once the broader market attains stability. Nair cites the moderation in global commodity prices and the upward revision of India’s GDP for the fiscal year 2025 as positive factors that could highlight robust domestic demand.

“We anticipate continued bargain opportunities in mid-and small-cap stocks, whose valuations are underpinned by strong fundamentals,” Nair states.

Navigating Market Volatility

As market participants navigate the volatility, analysts emphasize the importance of closely monitoring key support and resistance levels. A decisive breach of critical technical thresholds could potentially amplify selling pressure or conversely, propel the indices higher.

While caution lingers, particularly towards the mid and small-cap segments, the optimism surrounding moderating global commodity prices and India’s GDP outlook suggests that once stability returns to the broader market, opportunities may arise for investors to capitalize on undervalued stocks with strong fundamentals.

In the meantime, market participants are advised to exercise prudence and maintain a disciplined approach, closely monitoring developments and seeking guidance from seasoned market experts to navigate the ebb and flow of market sentiment effectively.