Nifty 50 closes below 200-week moving average as selling pressure mounts

Market internals continue to deteriorate, with the Nifty 500/Nifty 50 ratio testing five-month support. "Client net stock futures longs have eased to a 1.5-month low but remain elevated historically, leaving scope for further unwinding," said Kruti Shah, Quant Analyst, Equirus Securities. The Nifty has struggled to move above 22,786 over the past two days, said Chandan Taparia, Head of Derivatives & Technical Research at Motilal Oswal.

"There is put open interest at 22,500, but some traders may be buying puts for hedging purposes. A sustained move below 22,500 could trigger a fresh sell-off and another leg of downside." Shah sees the support even lower than 22,500, saying the near-term bias remains defensive, with 22,000–22,200 as an immediate support zone and 23,000 as resistance. "A sustained recovery will require stabilisation in positioning and broader-market participation."

The exacerbated selling over the past week, the index has fallen 2.4 percent during this period, comes amid renewed tensions between US and Iran, stalled diplomatic talks and reports of potential renewed US–Israeli strikes on Iranian nuclear and military assets. Iran’s threat of a more aggressive military response and rising hostilities in the Strait of Hormuz, a critical global oil transit route, have further fuelled concerns over supply disruptions and inflationary pressures, noted Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services.

The tensions have sent oil prices shooting higher, sustaining above $105/bbl persistently. Further, global equities have also seen a sell-off, while bond yields across the globe are spiking. Going forward, key monitorables remain the ongoing earnings season, commentary from the US Federal Reserve, and progress on the India-US trade deal.