The Indian stock market is currently navigating a complex landscape influenced by global cues, domestic factors, and evolving trade dynamics. Recent trading sessions have seen benchmark indices like the Nifty 50 and Sensex facing selling pressure, prompting investors and analysts to closely monitor key support and resistance levels.

Nifty 50 Trade Setup

Technical analysis suggests that the Nifty 50 has strong support around the 25,000-25,100 range, which aligns with the 20-Day Exponential Moving Average and a bullish gap observed on daily charts. According to Osho Krishan, a Senior Analyst at Angel One, maintaining this support level could present an opportunity for establishing long positions. However, a decisive break below 25,000 could trigger a more significant correction in the near term. Shrikant Chouhan, Head of Equity Research at Kotak Securities Ltd., has pointed out 24,200 as a pivotal support level.

Nilesh Jain, Head of Technical and Derivatives Research at Centrum Broking, noted that the Nifty has completed a 38.2% Fibonacci retracement of its rally from 24,404 to its recent peak of 25,448, with 25,050 acting as a key level. A move below this level might lead to a further decline towards 24,920, coinciding with the 50-day and 100-day moving averages.

US Fed Rate Impact

The US Federal Reserve's recent decision to cut its key interest rate by 25 basis points to a target range of 4.0-4.25% has implications for the Indian stock market. While a 25 bps rate cut might have limited immediate effects, experts suggest that further cuts could enhance risk appetite and potentially trigger positive reactions in sectors like IT and banking. A cumulative rate reduction of 50 bps or more could be a positive catalyst for emerging markets like India, potentially weakening the US dollar and bond yields, and triggering foreign capital inflows.

Lower US yields tend to reduce the relative appeal of American bonds, potentially encouraging foreign investors to allocate more funds to emerging markets like India. A softer dollar can also aid rupee stability, helping to curb import inflation and bolster investor sentiment.

US-India Trade Deal

The ongoing discussions surrounding a potential US-India trade deal are another critical factor influencing market sentiment. Sunny Agrawal from SBI Securities suggested that progress in the trade deal is likely to trigger short covering in the stock market. Foreign institutional investors (FIIs) have been holding a significant long-short ratio, and positive developments in trade talks could lead to a Nifty index surge of another 600-800 points. The market is also anticipating pent-up consumer demand from the Navaratri festive season, which could boost confidence in corporate earnings.

However, analysts believe that the market has only partially factored in the assumption of a 25% cap on US tariffs, and the lack of clarity continues to weigh on investor sentiment. A reciprocal tariff of 25% would be viewed as a negative outcome.

Stocks to Watch

Given the current market dynamics, several stocks are drawing attention from analysts. Ganesh Dongre recommends buying PNB Housing Finance share price at ₹891 with a stoploss at ₹860 with PNB Housing Finance share price target of ₹930. Ganesh Dongre also recommends buying Bajaj Auto share price at ₹8,985 with a stoploss at ₹8,900 with Bajaj Auto share price target of ₹9,200. Ganesh Dongre recommends buying PNB share price at ₹114 with a stoploss at ₹110 with PNB share price target of ₹120. Rupak De, Senior Technical Analyst at LKP Securities recommends buying Shipping Corporation at Rs 232.48 with a target of Rs 240 and Syrma SGS Technology at Rs 858.4 with a target of Rs 910.

Overall Market Sentiment

Overall, the Indian stock market is exhibiting a mix of caution and optimism. Profit-booking after GST reforms, concerns over H-1B visa fee hikes, and US trade rhetoric are prompting cautious sentiment. However, structural reforms and domestic growth drivers are keeping the underlying trend constructive.