Indian equity benchmarks, the Sensex and Nifty 50, staged a remarkable turnaround on Monday, erasing steep intraday losses to close in positive territory. The recovery was triggered by reassuring news regarding upcoming trade negotiations between India and the United States.
Market Recovers on Trade Talk Clarity
The key domestic indices had plunged nearly 1% in late morning trade, weighed down by persistent foreign fund outflows, fears of new US tariffs on Indian goods, and broader geopolitical concerns. The 30-share BSE Sensex had dropped 715.17 points, or 0.85%, to 82,861.07, while the Nifty 50 fell 209.9 points, or 0.81%, to 25,473.40.
However, sentiment improved after the new Washington ambassador to New Delhi provided clarity, announcing that the next round of trade discussions is scheduled for January 13. This helped allay investor worries, leading to a sharp rebound. By 14:35 IST, the Nifty 50 had gained 0.3% to settle at 25,758.80, and the Sensex climbed 0.11% to 83,670.46.
Technical Outlook and Expert Analysis
Vinay Rajani, Senior Technical and Derivative Analyst at HDFC Securities, provided a detailed technical perspective. He noted that the Nifty 50 has declined over 800 points from its recent all-time high of 26,373. After forming a triple top pattern near 26,300, the index has now fallen below its 20-, 50-, and 100-day Exponential Moving Averages (EMAs), signaling a shift towards a positional downtrend.
"Nifty 50 has been falling for the last 6 trading sessions in continuation of a downtrend," Rajani stated. He identified the previous swing high of 25,700 as immediate resistance and placed positional resistance in the 26,050-26,100 band. A close above this zone would negate the current downtrend. On the support front, meaningful levels are seen near 25,300, followed by the 200-day EMA at 25,138.
Rajani also highlighted concerning signals from smaller stocks. Microcap and Smallcap indices have witnessed a 'death crossover,' with their 50-day EMA crossing below the 200-day EMA, indicating heightened risk. The India VIX, a fear gauge, also bounced from a 52-week low of 8.72 to around 10.93 on January 9, 2026, suggesting rising investor caution.
ETF Recommendations and Market Strategy
Amid the volatility, HDFC Securities shared specific ETF picks. They recommended a buy on HDFC Gold ETF with a target of Rs. 125 and a stop-loss at Rs. 115, citing a sustained uptrend on all timeframes with the ETF positioned above all key moving averages.
Similarly, a buy on HDFC Silver ETF was advised with a target of Rs. 260 and a stop-loss at Rs. 230, backed by a consistent pattern of higher tops and higher bottoms on weekly charts.
For the Nifty 50, the overall strategy remains cautious. "Traders should utilize bounces to lighten long commitments," Rajani suggested, emphasizing that any level below the 100-day EMA (25,618) could drag the index towards lower supports. The market's direction will likely hinge on global cues and the outcome of the upcoming India-US trade talks.
