The Nifty 50 sharply closed lower, breaching the critical psychological and technical level of 26,000, to settle at 25,856.45, down 170.85 points (-0.66%). The Sensex mirrored the weakness, losing 470.45 points (-0.55%) to close at 84,742.91.
Market breadth was overwhelmingly negative, with the advance-decline ratio skewed heavily toward decliners at roughly 1:4 across the broader market, signalling broad-based profit-taking. On the sectoral front, financials, metals, and IT were the major laggards, with Axis Bank plummeting nearly 5% after concerns over its net interest margins (NIMs) weighed heavily on the banking sector.
The negative sentiment was compounded by the Indian Rupee hitting a fresh record low, surpassing 91 against the US dollar, underscoring macroeconomic stress from capital outflows. Conversely, defensive plays in the telecommunications and FMCG sectors showed relative resilience but were insufficient to reverse the downbeat market trend ahead of crucial US economic data.
Two stock recommendations by MarketSmith India:
Buy: Jindal Stainless Ltd (current price: ₹797)
Why it’s recommended: Strong market leadership in stainless-steel production, diversified product mix and value-added offerings, capacity expansions improving volume visibility, healthy balance sheet, and declining debt levels, robust demand from infrastructure, automotive, and industrial sectors, consistent operational efficiencies and cost optimization, integrated manufacturing and backward linkages improving margins, steady export presence and global customer base.
Key metrics: P/E: 25.53 | 52-week high: ₹826 | Volume: ₹35.58 crore
Technical analysis: Reclaimed its 50-DMA recently and gave a trendline breakout
Risk factors: Cyclical steel industry exposed to demand downturns, high sensitivity to nickel, ferrochrome, and raw-material price volatility, global anti-dumping duties or trade restrictions impacting exports, currency fluctuations affecting imported raw-material costs, competitive pressure from domestic and international players, environmental, ESG, and regulatory compliance costs, margin compression risk during commodity downcycles, and concentration risk in certain end-use industries.
Buy: ₹785–800
Target price: ₹895 in two to three months
Stop loss: ₹750
Buy: Avanti Feeds (current price: ₹828)
Why it’s recommended: Market leadership in shrimp feed with strong distribution, rising global demand for farmed shrimp, backward integration, and operational efficiency
Key metrics: P/E: 18.30 | 52-week high: ₹964 | Volume: ₹69 crore
Technical analysis: Downward sloping trendline breakout
Risk factors: High dependence on global shrimp export markets,
Buy at: ₹815-830
Target price: ₹900 in two to three months
Stop loss: ₹799
Nifty 50: How the benchmark index performed on 16 December
Indian equities extended their corrective phase on 16 December, with the Nifty 50 closing at 25,860.10, down 0.64% (-167 points), after trading in a narrow range through the session. Broader market sentiment weakened further, as reflected in a soft advance-decline ratio of 1,023 advances to 2,096 declines, signalling broad-based selling pressure.
On the sectoral front, Nifty Private Banks, IT, financial services, metals, and pharma registered meaningful declines. On the other hand, consumer durables was the lone standout, ending firmly in the green. PSU Banks, realty, and oil and gas also moderated, adding to the cautious tone.
The Nifty 50 extended its corrective bias today, with price action showing a clear loss of upward momentum within the broader rising channel. The short-term trendline that previously acted as dynamic support has been breached, leading to a shift toward a more distribution-like pattern. RSI continues to trend downward inside a well-defined falling channel, reflecting persistent negative momentum.
The indicator has also formed consecutive lower highs, confirming bearish divergence relative to the recent price peaks. This deterioration in strength suggests that buyers are becoming increasingly reluctant at higher levels. MACD reinforces this view, with the histogram printing deeper red bars and the MACD line remaining below the signal line. The flattening of both lines indicates fading trend strength and aligns with the broader loss of momentum seen on price charts.
According to O’Neil’s methodology of market direction, the market status has shifted to a “confirmed uptrend” as it decisively surpassed its previous rally high of 25,670 to register a new 52-week.
The index closed on a weaker note, failing to move above the 21-DMA and encountering renewed selling pressure at higher levels. On the downside, 25,700 now serves as the initial support, while 25,300 remains a critical area for maintaining the broader uptrend and overall market stability. Conversely, a decisive close above 26,300 would meaningfully improve the technical setup and pave the way for a continuation of the upward move toward 26,500-26,700 in the near term.
How did Nifty Bank perform yesterday?
The Nifty Bank opened on a weaker note and remained in negative territory throughout the trading session. The index formed a bearish candle on the daily chart with a lower-high and lower-low structure and slipped below its 21-DMA. During the session, it opened at 59,288.75, touched a high of 59,335.25 and a low of 58,983.05, before settling at 59,034.60. The ongoing profit-booking phase calls for caution, disciplined risk management, and a selective stock-picking approach. Additionally, traders should monitor whether the index remains below its short-term moving averages, as this could increase the downside pressure.
The RSI has turned slightly lower and is positioned at 51. On the other hand, the MACD has generated a bearish crossover but remains above the zero line, indicating underlying strength despite near-term caution. According to O’Neil’s methodology of market direction, Bank Nifty continues to stay in a Confirmed Uptrend, reinforcing a constructive broader outlook. Collectively, these technical signals suggest a favourable setup in which select Banking stocks may be positioned for potential breakouts. However, ongoing monitoring is crucial to gauge follow-through strength and assess short-term stability in the sessions ahead.
The index ended the session slightly lower and briefly slipped below its 21-DMA. However, this pullback appears constructive within the ongoing uptrend. Even if mild profit-booking persists, any dip toward the 50-DMA near 58,300 would likely act as a buying opportunity. A swift reclaim of the 21-DMA would reinforce the bullish structure and signal renewed strength. On the downside, immediate support is placed around 58,800-58,000, offering a strong cushion. Moreover, improving breadth across banking constituents continues to strengthen the positive outlook. A sustained close above key resistance levels could invite incremental institutional participation, potentially accelerating the index’s upward trajectory.
MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O’Neil. You can access a 10-day free trial by registering on its website.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.