The Indian stock market witnessed a day of mixed signals, influenced by global cues, domestic profit booking, and anticipation surrounding key events. The Nifty 50 ended its six-day winning streak on November 18, closing lower by 0.40% at 25,910.05, while the Sensex slipped 0.33% to close at 84,673.02. Despite the dip, market sentiment remains cautiously optimistic, with experts suggesting a potential for healthy upside in the medium term, contingent on global factors and the unfolding of the India-US trade talks.
Nifty 50 Trade Setup
Technical analysis suggests that the Nifty 50 is likely to remain volatile in the short term. Key support levels are identified in the 25,700-25,800 range, which analysts believe should provide a robust safety net. A breach below this level could trigger a slide towards 25,650. On the upside, immediate resistance is seen at 26,022, with a sustained move above this level potentially paving the way for 26,130.
Analysts recommend a trading strategy of buying Nifty in the 25,800-25,950 range with a stop loss at 25,700, targeting levels of 26,000-26,275.. Aggressive traders may consider selling in the 26,100-26,200 range with a strict stop loss at 26,300, aiming for targets between 25,825-26,050.
Impact of Trump Tariffs
The shadow of potential Trump tariffs continues to loom over global markets. Historically, the implementation of tariffs by the Trump administration has led to increased stock market volatility and uncertainty. A Goldman Sachs Research report indicated that every five-percentage-point increase in the US tariff rate could reduce S&P 500 earnings per share by roughly 1-2%. The announcement of sweeping tariffs on goods entering the U.S. can result in lower demand for products and decline in the stock price among companies subject to those tariffs.
India-US Trade Talks
The market is keenly awaiting developments on the India-US trade deal. Reports suggest that both countries are close to finalizing the first phase of their bilateral trade agreement, potentially by the end of November. This agreement is expected to address the 50% tariffs imposed on Indian goods by the US. A reduction in tariffs to the 15-16% range could provide significant relief to sectors like textiles and gems and jewellery.
While the possibility of a trade deal appears to be largely priced in by the market, a more favorable deal than expected could positively surprise investors. Conversely, tariffs above 25% could weigh on market sentiment. The market will also closely watch the government's stance on agriculture-related provisions within the trade deal.
Gold Prices
Gold, often considered a safe-haven asset, exhibits a complex relationship with the stock market. It is often correlated with the stock market during risk-on periods, while it decouples and becomes inversely correlated during periods of stress. Geopolitical instability or fears of a deep recession can quickly escalate gold prices due to its safe-haven status. Some reports indicate that when the stock market is pessimistic, gold performs very well.
Stocks to Buy
Despite the day's downturn, experts continue to identify stocks with potential for short-term gains. Vishnu Kant Upadhyay of Master Capital Services recommends Sun Pharma, Tata Communications and Mahindra Lifespace Developers. Hitesh Tailor of Choice Equity Broking suggests Hero MotoCorp, HUDCO and Marico.
Disclaimer: Investment in the stock market is subject to market risk. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.
