Markets Eye Break from 3-Day Losing Streak
After a choppy week, Indian equity markets are set to open slightly higher on Monday, September 1, hinting at a possible pause in the three-day losing streak. GIFT Nifty was trading at 25,597, up 46 points or 0.2%, signaling a positive start for benchmark indices Sensex and Nifty.
On Friday, August 29, both indices slipped in the last hour of trade as selling in auto, IT, and metal stocks outweighed gains in FMCG counters. Broader indices also turned weak, with mid- and small-cap stocks trimming early gains to end lower.
FII and DII Flows: Diverging Trends
Foreign investors (FIIs/FPIs) remained net sellers, offloading equities worth ₹8,313 crore. In contrast, domestic institutional investors (DIIs) provided support, net buying stocks worth ₹11,487 crore.
This tug-of-war highlights the current battle between global risk aversion and domestic buying strength (Reuters).
Nifty: Technical Picture and Key Levels
Nifty ended August weak, slipping below key support zones and hitting a two-month low.
Bearish Signals:
- A bearish Harami candlestick pattern has emerged on the monthly chart.
- Strong call writing at critical strikes and migration of put positions to lower levels confirm bearish sentiment.
- The index remains below major moving averages, with resistances steadily shifting downward.
Crucial Levels to Watch:
- Upside cap: Only a decisive move above 24,800 can revive momentum.
- Support zone: Holding above 24,400 is vital to avoid deeper corrections.
- Trading approach: For now, analysts favor a “sell-on-rise” strategy, with rebounds in oversold zones likely to trigger fresh shorts rather than sustained rallies.
For more on technical setups, refer to Investopedia’s guide on candlestick patterns.
Nifty Bank: Resistance and Breakdown Zones
The Nifty Bank index also closed August on a weak note, breaking below key supports.
- A bearish monthly candle indicates the dominance of sellers.
- Resistance levels are shifting lower amid heavy call writing and put unwinding.
Key Levels:
- Recovery trigger: A decisive move above 54,500 is necessary for a sustained rebound.
- Critical support: Holding above 53,500 will be crucial to avoid a deeper slide.
- Until then, the sell-on-rise approach remains the most prudent strategy.
Volatility and Sentiment Indicators
- India VIX dropped 3.49% to 11.75, suggesting consolidation rather than panic. The subdued volatility indicates cautious optimism, as market participants are not rushing into heavy hedging.
- The Put-Call Ratio (PCR) slipped sharply from 0.64 to 0.54, reflecting elevated supply pressure. However, with PCR in deeply oversold territory, a short-term technical rebound cannot be ruled out.
For context, a low PCR often hints at excessive bearishness, sometimes leading to short-covering rallies (NSE India).
Conclusion
Indian equities are showing signs of stabilization after three days of declines, with global cues and institutional flows shaping the near-term outlook. While technical charts remain tilted toward weakness, oversold indicators may trigger minor rebounds. Investors, however, should approach such moves cautiously and continue to monitor key resistance and support levels for directional clarity.
