Sensex Down 319 Points, Nifty at 23,361; Tomorrow Nifty Prediction
Tomorrow Nifty Prediction
Market Overview: Nifty Struggles Amidst Tariff Tensions – A Look Ahead for February 4
The Indian stock market faced significant pressure on February 3, as the ongoing tariff trade war between the U.S. and key global players, including China, Mexico, and Canada, created renewed volatility.
This geopolitical uncertainty has rattled markets, resulting in a decline for major Indian indices. The Nifty ended the day at 23,361.05, shedding 121.10 points, or 0.52%.
The Sensex also mirrored this trend, closing down 319.22 points, or 0.41%, at 77,186.74.
The downturn was particularly evident in key sectors such as capital goods, metals, oil and gas, and power, all of which experienced significant losses.
Despite this, some stocks showed resilience, particularly in the NBFC, IT, and automotive sectors, which posted gains in the face of the broader market weakness.
Stocks like Bajaj Finance, M&M, Wipro, Shriram Finance, and Maruti Suzuki were among the top performers, indicating some pockets of strength amidst the downturn.
On a broader scale, the market displayed marked disparity, with the BSE Midcap index falling by 1.2%, while the Smallcap index took a harder hit, plummeting nearly 5%.
This divergence highlights the uneven recovery across different segments of the market. In terms of sectoral performance, only the Consumer Durables and IT sectors managed to finish the day in the green.
In contrast, the Capital Goods index dropped by 4%, while sectors such as metals, oil and gas, power, and PSU stocks saw declines ranging from 2-3%.
At the close of trading, the market breadth was decidedly negative, with 1,102 stocks advancing, 2,742 declining, and 163 remaining unchanged.
This bearish sentiment was largely attributed to heightened concerns over the impact of tariff wars on global trade and investor confidence.
Key Market Movers: What Drove the Decline?
The broader market weakness can be attributed to several factors, but the most immediate catalyst was the ongoing trade tensions stemming from tariff announcements by U.S. President Donald Trump.
Trump’s decision to impose tariffs on imports from China, Mexico, and Canada triggered a wave of risk aversion across global equity markets.
This, in turn, impacted investor sentiment in India, where foreign investors have already been cautious due to domestic challenges such as slowing economic growth and inflationary pressures.
The Indian stock market, which had already been grappling with the effects of these global tensions, saw intensified selling pressure in mid and small-cap stocks.
The sharp declines in consumption-driven sectors like FMCG and automobiles, which had previously been seen as defensive plays, only added to the bearish mood.
The fear of escalating trade disputes weighed heavily on the market, sparking widespread panic selling and exacerbating the downturn.
Moreover, the Indian rupee’s sharp depreciation added another layer of concern for investors. A weaker rupee typically hurts foreign investor sentiment, as it erodes the value of their investments in rupee terms.
As a result, the foreign institutional investors (FIIs) have been net sellers, further contributing to the negative market sentiment.
Nifty’s Prospects for February 4: What to Expect?
With the market closing lower on February 3, analysts are now turning their attention to how the Nifty may move on February 4.
While the immediate outlook remains cautious, there are also indications that a rebound could be on the horizon.
Several key technical levels and support zones will be crucial in determining whether the market can stabilize or if further declines are likely.
Technical Analysis and Support Levels
Jatin Gedia, Mirae Asset Sharekhan: Jatin Gedia observes that Nifty started the trading day with a decline, followed by a phase of consolidation before ultimately closing lower.
According to Gedia, Nifty is currently retracing the rally it experienced from the 22,786 level to 22,632. On the daily chart, a key support zone is identified between 23,250 and 23,209, which aligns with both the 20-day moving average and the 50% Fibonacci retracement level.
Gedia believes that this support zone is crucial for the Nifty to maintain its upward momentum. If the index holds these levels, it is expected to resume its rise toward the 23,820 to 24,000 range in the short term.
He also mentions that the immediate resistance lies between 23,560 and 23,630, which investors will need to monitor closely.
Aditya Gaggar, Progressive Shares: Aditya Gaggar, Director at Progressive Shares, also highlights that the market faced headwinds due to the ongoing tariff-related trade war.
Despite the initial dip in the market, a rebound was seen, although the index ultimately closed in the red. Gaggar points to the Nifty’s support at 23,280, which corresponds to its 21-day moving average, as a potential point of resistance that could offer some stabilization.
He believes that as long as the market remains above this level, there is still a chance for a rebound. Gaggar suggests that if the recovery persists, the Nifty could target the 23,550 level in the near term, potentially signaling a positive short-term trend.
Prashant Tapase, Mehta Equities: Prashant Tapase provides a slightly more cautious outlook, noting that global equity markets have been significantly impacted by tariff-related fears, particularly following President Trump’s announcements.
This has led to a broad-based sell-off in mid and small-cap stocks, and in consumer-driven sectors such as FMCG and automobiles.
Tapase warns that this geopolitical uncertainty could trigger further panic selling, especially in light of the ongoing rupee depreciation, which adds to investor concerns.
He believes that the selling trend may continue for the time being, especially as foreign investors are unlikely to reverse their selling behavior without a stabilization of global and domestic factors.
Market Sentiment and the Road Ahead
In light of these factors, the Nifty’s movement on February 4 will largely depend on whether the support zones hold or if further downside risk materializes.
A failure to hold key support levels could lead to deeper corrections, especially in the face of growing global trade concerns.
On the other hand, if the market shows signs of stabilization and a rebound from support levels, there could be opportunities for short-term gains, particularly in resilient sectors like IT and automotive.
For now, market participants will be keeping a close eye on global geopolitical developments, particularly any updates on the tariff situation, as well as domestic factors like economic data releases and corporate earnings.
The ability of the Nifty to maintain support at 23,250-23,209 will be a critical factor in determining the direction of the market in the coming days.
In conclusion, while the market faces significant headwinds, there are also technical and fundamental factors that could support a rebound.
As always, investors should be vigilant, balancing their portfolios, and managing risk carefully amid the prevailing uncertainty.
With the right mix of caution and strategic positioning, there may still be opportunities for market participants to capitalize on short-term movements in the Nifty on February 4 and beyond.
