Sensex, Nifty Resume Downtrend, Fall Over 1%; Analysts Weigh in on Next Support Levels

Market Update - March 8, 2023

Indian Equity Markets Decline

The Indian equity benchmark indices, Sensex and Nifty, declined on Wednesday, falling over 1 percent amid continued foreign fund outflows and selling in blue-chip banking shares. Sensex was trading 878.12 points or 1.12 percent lower at 77,327.86, while Nifty slipped 242.40 points or 1 percent to 24,019.20.

Market Trends

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Markets had closed higher in the previous session, with Sensex jumping 639.82 points or 0.82 percent to settle at 78,205.98, and Nifty climbing 233.55 points or 0.97 percent to end at 24,261.60. Analysts attribute the recent pullback in domestic equities to a sharp correction in global crude prices, with Brent crude declining from around USD 120 a barrel to nearly USD 86.

Market Outlook

Volatility has eased, with the India VIX cooling from levels near 24 to below 19. However, analysts caution that the broader market structure continues to indicate weakness. Ruchit Jain of Motilal Oswal Financial Services notes that the broader market structure continues to reflect a lower top–lower bottom formation, suggesting that the current move should be viewed as a pullback rather than a confirmed trend reversal at this stage.

Support and Resistance Levels

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

For the pullback to sustain, the Nifty needs to hold above 24,200, which could open the door for a move towards 24,444 and 24,600. On the downside, support is seen around 24,000, followed by 23,800. Anand James of Geojit Investments notes that the Nifty had turned lower after testing the 24,300–24,370 region in the previous session, and that this region would remain the breakout point to consider the possibility of 25,000.