Stock market crash: Sensex crosses 4000 points this week. Can Nifty 50 save 23,250 support or more pain?

Stock market crash: Following the US Fed’s aggressive outlook on interest rate cuts and selling of financial instruments, the Indian stock market broke its four-week winning streak. Major benchmark indices have wiped out their four-week gains over the past week. The Nifty 50 index fell to 23,587 from 24,768, with a weekly loss of 1,181 points. The BSE Sensex crashed from 82,133 to 78,041 levels, registering a loss of over 4,000 points last week. Similarly, the Nifty Bank index crashed from 53,583 to 50,759, with a weekly loss of 2,824 points last week.

During this stock market crash, the Nifty 50 index broke below the 200-DEMA support and settled at 23,800, which could have boosted the morale of the Indian stock markets. In this bear-hit market, the Nifty 50 index is close to its recent swing low of 23,250, and bets are high on whether this support will remain sacred or the 50-share index will hit a new low.

Why is the Indian stock market falling?

According to stock market experts, the bears had an opportunity to paint the Indian stock market red in the run-up to Christmas due to the US Fed’s aggressive outlook on interest rate cuts. This strengthened the value of the US dollar, leading to buying in the bond and currency markets. They said FII sales are another reason why DII sentiments for bottom fishing are not being stoked.

Speaking about the reason for last week’s stock market crash, Mahesh M Ojha, AVP – Research at Hensex Securities, said: “Global cues turned weak following aggressive guidance from the US Federal Reserve. This strengthened the US dollar in the FOREX market. This led to new purchases on the bond and currency markets. Thus, FII sales increased further as DIIs remained mere expectations due to the uncertainties of the post-weak 2025 earnings season; therefore, they are expected to remain a silent player.” He said falling rupees lead to macroeconomic concerns and uncertainty over the recovery after the weak earnings season. These are other major reasons for not allowing the DIIs to start bottom fishing .

What now after a stock market crash?

Speaking about the outlook for the Nifty 50 index, Vaishali Parekh, Vice President – ​​Technical Research at Prabhudas Lilladher, said: “The Nifty 50 index continued to see a weak bias and ended the week below the key 200-period MA of 23,800 zone and snaps. Four-week winning streak closes near the 23,600 zone The 50-stock index has seen a brief period of correction from the 23,600 zone to 24,850 zone and has the next major support from the previous low near the 23,250 zone, below which the overall trend would turn bearish .”

On the outlook for the Bank Nifty index, Vaishali Parekh said, “The Bank Nifty index extended losses to a loss of over 800 points and has come close to the significant 200-period MA of 50,500 levels, which includes the overall bias would become weak. The next major support is near the previous low, which was reached at nearly 49,800 levels, below which the trend would turn bearish. After that, one can expect a further intensification of selling pressure in the coming days.”

Is there a trend reversal?

Expecting the Indian stock market to remain highly volatile on Monday, Osho Krishnan, Sr. Analyst – Technical & Derivatives at Angel One: “From a technical point of view, with Nifty falling below the crucial zone of 200 SMA, the next potential support could be provided. This is seen around the recent swing low around 23,200 to 23,100 points, while a decisive break in the near term is likely to open further downside towards 22,800. The formation of a strong bearish candle on the weekly chart certainly shows a reversal, where bounces can be seen as opportunities to exit longs. In terms of resistance, 23,800 to 24,000 is likely seen as an intermediate hurdle, followed by a hurdle. 24,150 to 24,300 levels, which coincides with the bearish gap and cluster of EMAs on the daily charts for the upcoming shortened week.”

Angel One’s Osho Krishnan advised investors to approach markets with good risk management and avoid making complacent bets for now.

Sectors to watch for bottom fishing

On sectors that could fuel a trend reversal in Dalal Street, Aditya Gaggar, Director, Progressive Shares, said: “The IT sector has corrected, but the underlying positive trend has not changed yet, and we believe that sooner or later the sector will catch up with the trend will move along. its primary uptrend. The pharmaceutical sector has shown a breakout from the declining channel pattern. Still, we await confirmation of next week’s activity (Dr. Reddy-Falling Channel Breakout, Lupine-Forming a Bullish Flag and Pole pattern).”

Disclaimer: The above views and recommendations are those of individual analysts, experts and brokerage firms, not of Mint. We advise investors to consult certified experts before making investment decisions.