Oil-driven inflation fears push Indian benchmarks to key technical support
A surge in crude oil prices has triggered a technical breakdown in Indian equities, with the Nifty 50 and Sensex poised for a fourth consecutive losing session as derivatives signal growing bearish sentiment.
Indian benchmarks are set to open lower on Friday, extending a four-day sell-off driven by surging crude oil prices and global market weakness. Gift Nifty was trading around 23,681, indicating a gap-down start of nearly 192 points from Thursday's close.
The Nifty 50 fell 0.53% to close at 23,869.60, while the Sensex dropped 0.47% to 76,391.39. The declines reflect renewed inflation fears tied to the recent spike in oil, which has dampened risk appetite across the region.
The technical structure for Indian equities has deteriorated significantly. The Nifty 50 has slipped below its 20-day, 50-day, 100-day and 200-day Exponential Moving Averages, a shift that Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said reaffirms bearish dominance.
Derivatives data reinforces the pessimistic outlook. The Nifty put-call ratio stood at 0.68, indicating a cautious-to-bearish undertone. “The highest Put Open Interest (OI) was concentrated at the 23,800 strike, while the highest Call OI was seen at the 24,000 strike, highlighting 23,700 – 23,750 as the immediate support zone and 23,950 – 24,000 as the first resistance area,” said Sachin Gupta, VP - Technical Research at Choice Broking.
Traders are closely watching the 23,650 level on the Nifty 50, which corresponds to a June 15 upside gap and trendline support. “Technically, this market action signals weakness in Nifty 50 with volatility. Nifty is on the way down to the crucial supports of around 23,700 - 23,650 levels,” Shetti noted. For the Sensex, Shrikant Chouhan, Head of Equity Research at Kotak Securities, warned that a weak structure will persist below 76,500, with downside targets at 76,000 to 75,700.
The banking sector is bearing the brunt of the selling. The Bank Nifty dropped 0.94% to 56,592.00, closing below its 200-day moving average. Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, pointed to a daily RSI of 44.20, noting that momentum indicators suggest bearish pressure remains prevalent. The index is testing the 38.2% Fibonacci retracement level at 56,540, with a break below 56,000 risking further losses toward 55,400.
Until benchmarks reclaim their key resistance levels, market professionals advise strict risk management. “The short-term trend remains under pressure, and traders should watch key support levels closely. Until a decisive recovery above resistance levels is seen, a cautious approach is advisable,” said Riyank Arora, Associate Vice President – HNI & Derivatives at Hedged.in.
