The Indian equity market has been gripped by a severe sell-off, extending its losing streak to five consecutive sessions. The primary catalyst for the downturn is growing anxiety among investors over potential new trade tariffs from the United States, specifically warnings from former President Donald Trump targeting countries, including India, for purchasing Russian crude oil.
Trump Tariff Threats and Supreme Court Decision Loom Large
The market sentiment took a significant hit due to the uncertainty surrounding proposed US tariffs. Donald Trump is reportedly considering imposing tariffs as high as 500% on nations that buy oil from Russia. In a direct warning to India, this could translate to an initial 25% tariff under a reciprocal order, plus an additional 25% duty linked specifically to India's continued imports of Russian crude.
Adding to the tension, the US Supreme Court is expected to rule on Trump's "Liberation Day" tariffs on Friday, January 9. This has prompted investors to adopt a cautious wait-and-watch approach. Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that if the Supreme Court declares these tariffs illegal, it could trigger a rally in the Indian market, which has been among the worst affected by the 50% duties.
Market Carnage and Technical Damage
The selling pressure intensified over the last two days, resulting in substantial losses. On January 9, the Sensex plummeted over 670 points during intraday trade, bringing its total decline over the five-day period to a staggering 2,200 points, or 2.6%. The broader Nifty 50 index mirrored the fall, shedding 2.5%.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, provided his analysis on the Nifty's trajectory. He stated that after displaying weakness within a range, the index witnessed a sharp decline on Thursday. While the short-term trend has turned weak, the overall medium-term trend for Nifty remains positive.
Shetti explained that the bullish chart pattern of higher tops and bottoms is still intact on daily charts. The current weakness could be part of forming a new higher bottom, pending confirmation. The immediate support level of 26,100 has been breached, with the next key support now seen around 25,850. Immediate resistance is placed at 26,150.
Technical Stock Picks from HDFC Securities
Amid the volatile environment, Nagaraj Shetti has recommended two stocks for investors to consider in the near term:
Dabur: He advises buying the stock at ₹525, setting a target price of ₹550 and a stop loss at ₹510. The suggested timeframe for this trade is one week.
Inox Wind: The recommendation is to buy at ₹120, with a target of ₹114 and a stop loss at ₹124. This trade also has a one-week horizon.
Disclaimer: This information is for educational purposes only. The views and recommendations are those of the individual analyst and not of Mint. Investors are strongly advised to consult certified experts before making any investment decisions.
