The Indian stock market showcased resilience on Wednesday, with the Nifty 50 index forming a green candle on the daily chart, signaling underlying strength. This positive momentum was further bolstered by the Smallcap 100 index rebounding from its previous support level, forming a bullish engulfing pattern, and the Midcap 100 index surpassing the high of its earlier hammer candles. These technical indicators collectively reinforce a bullish sentiment in the broader market.
According to Hrishikesh Yedve of Asit C. Mehta Investment Intermediates, the buy-on-dips strategy remains favorable as long as the Nifty holds above its recent low of 22,725. The 21-Day Simple Moving Average (DSMA) at 23,230 is seen as an immediate resistance level. A decisive breakout above this level could confirm a near-term bottom reversal, potentially opening the door for further gains.
Open Interest Data Highlights
In the derivatives market, the highest open interest (OI) on the call side was observed at the 23,100 and 23,000 strike prices, indicating potential resistance zones. On the put side, the highest OI was concentrated at the 22,800 strike price, followed by 22,900, suggesting strong support levels. This OI data underscores the market’s cautious optimism, with traders positioning themselves for a potential upward move.
Broader Market Strength
The broader market indices, including small-cap and mid-cap stocks, have shown remarkable resilience. The Smallcap 100 index’s bullish engulfing pattern and the Midcap 100 index’s breakout above previous highs indicate that investor confidence is gradually returning to these segments. This broader participation is a positive sign for the overall market health.
Global Market Cues
While the Indian market displayed strength, global markets faced headwinds. Wall Street opened lower on Wednesday as investors grappled with U.S. President Donald Trump’s latest tariff threats and awaited the Federal Reserve’s January meeting minutes. The Dow Jones Industrial Average fell 78.2 points, or 0.18%, to 44,478.12, while the S&P 500 and Nasdaq Composite dropped 0.19% and 0.23%, respectively. These global uncertainties could weigh on Indian markets in the near term, but the domestic market’s resilience suggests it may continue to outperform.
Goldman Sachs Invests in BSE
In a significant development, Goldman Sachs acquired shares worth Rs 401 crore in the Bombay Stock Exchange (BSE) through an open market transaction. The U.S.-based financial giant purchased 7.28 lakh shares at an average price of Rs 5,504.42 per share. This move underscores the growing interest of global investors in India’s capital markets, despite recent volatility.
Gold and Silver Shine
Gold prices surged to an all-time high of Rs 89,400 per 10 grams in the domestic market, driven by strong global trends and safe-haven demand amid escalating trade tensions. Silver prices also rose by Rs 600 to Rs 99,600 per kilogram. The precious metals’ rally reflects investor caution and a flight to safety as global economic uncertainties persist.
ECB Rate Cut Pause Likely
The European Central Bank (ECB) may be approaching a pause in its rate-cutting cycle, according to ECB board member Isabel Schnabel. With inflation concerns resurfacing amid a potential trade war, the ECB’s dovish stance could be nearing its end. This development has implications for global liquidity and could influence emerging markets like India.
HSBC India Reports Strong Growth
HSBC India reported an 11.27% growth in pre-tax profit for 2024, reaching USD 1.688 billion. The bank operates 26 branches in India and employs 44,000 people, making it one of the largest foreign lenders in the country. This robust performance highlights the resilience of India’s financial sector.
ICICI Securities’ Bullish Outlook
ICICI Securities remains optimistic about the Nifty 50, setting a target of 26,000 within a year, implying a 14% upside from current levels. The brokerage favors sectors like financials, industrials, and discretionary consumption, with top picks including Bharti Airtel, UltraTech Cement, and State Bank of India (SBI). This bullish outlook is underpinned by expectations of earnings stabilization and policy support driving a recovery.
Market Correction and Valuation
The BSE 500 index has lost Rs 34 lakh crore in market capitalization so far in 2025, with 447 of its constituents witnessing declines. However, 53 stocks have managed to stay above their December 2024 levels, indicating selective resilience. This correction has brought valuations to more attractive levels, offering opportunities for long-term investors.
Trade War Concerns
U.S. President Donald Trump’s latest tariff threats, including a proposed 25% duty on imported cars, have added to global trade tensions. While India’s domestically-driven economy and strong services exports may mitigate the impact, the broader implications of a trade war remain a concern for global markets.
Conclusion
As the Nifty eyes a near-term bottom reversal, traders are advised to adopt a buy-on-dips strategy, keeping a close watch on the 22,725 support level. The broader market’s strength, coupled with positive technical indicators, suggests that the Indian stock market may continue to outperform despite global uncertainties. However, investors should remain cautious and focus on quality stocks with strong fundamentals to navigate the volatile landscape.