Indian equity markets extended their losing streak for the third consecutive session on Wednesday, with market participants closely watching quarterly results and global developments. Analysts expect the Nifty to trade sideways as investors track ongoing earnings announcements and international market cues.

Technical Analysis and Market Outlook

From a technical perspective, the Nifty faces critical support and resistance levels that could determine near-term market direction.

A decisive fall below 25,125 could trigger further selling pressure in the market. The India VIX, which measures market volatility and investor fear, rose 8.50% to settle at 13.78 levels, indicating heightened uncertainty among market participants.

Institutional Investment Flows

Institutional investment patterns revealed contrasting behavior between foreign and domestic investors on Wednesday.

Foreign portfolio investors continued their selling spree, offloading shares worth ₹1,788.00 crore. However, domestic institutional investors provided market support by purchasing shares worth ₹4,520.00 crore, partially offsetting the foreign selling pressure.

Currency Market Developments

The Indian rupee faced significant pressure, hitting a new all-time low against the US dollar. The currency declined 68 paise to close at 91.65 against the American currency on Wednesday. This sharp depreciation was attributed to persistent foreign fund outflows and heightened uncertainty in global markets, contributing to risk-off sentiment among investors.

F&O Market Activity

In the derivatives segment, Bandhan Bank and Sammaan Capital Securities entered the futures and options ban period. These securities crossed 95% of the market-wide position limit, restricting further position creation in the F&O segment.

Earnings Focus

Market participants are expected to focus on stock-specific action around quarterly results from several major companies including IndiGo, DLF, Indian Bank, and Coforge. These earnings announcements could provide direction to individual stocks and broader market sentiment in the coming sessions.

The Nifty experienced extreme volatility on Wednesday, showcasing the market's current fragile state as it swung dramatically between key levels before managing to defend the psychologically important 25,000 mark. Despite recovering 250 points from intraday lows, the lack of conviction in any recovery attempt became evident through the day's erratic price action.

Volatile Trading Session Highlights Market Uncertainty

The day's trading pattern revealed the underlying weakness in market sentiment. The Nifty's journey from 25,141 to an intraday low of 24,919, followed by a recovery to 25,300 and eventual close at 25,150, demonstrated the tug-of-war between bulls and bears.

The moment the Nifty approached the 25,300 mark, selling pressure emerged, preventing any sustained recovery. The index closed near its opening level, forming what analysts describe as a "spinning bottom" formation on the charts.

Critical Support Levels Under Pressure

The 200-Day Moving Average has now become the line in the sand for the Nifty, with even this traditionally strong support level showing signs of vulnerability. Market experts emphasize that the 25,000 level has become the most critical support to defend on the downside.

Rajesh Bhosale of Angel One highlighted the capped upside potential and advised caution given the absence of clear bullish reversal signals. The 50 Week Exponential Moving Average around 24,900-24,800 is acting as immediate support, while Wednesday's high of 25,300 remains a significant resistance level.

Nagaraj Shetti of HDFC Securities noted that the underlying market trend remains weak, with the Nifty struggling to sustain above the critical support of 25,150. A break below 24,900 could potentially drag the index toward 24,500 in the near term, while a sustained move above 25,200 could trigger further upside.

Banking Index Adds to Market Woes

The Nifty Bank index, which had previously supported the broader market, has now become a source of concern. After touching the 60,000 mark last week, the banking index has collapsed significantly.

Vatsal Bhuva of LKP Securities observed that the index has decisively cut below its 50-day Simple Moving Average, suggesting bears are gaining control. However, the index has managed to hold the crucial support of 59,700, providing some hope for stability.

Earnings Season Adds Complexity

The current market weakness is compounded by disappointing reactions to earnings, with even decent results being punished by investors. Thursday's session is expected to be particularly heavy in terms of both earnings reactions and new results.

Companies reporting earnings reactions include Eternal, Dr. Reddy's, Canara HSBC Life, EPack PreFab, HPCL, KEI Industries, and UTI AMC. Meanwhile, fresh results are expected from Aditya Birla Sun Life AMC, Coforge, Cyient, DLF, Indian Bank, Premier Energies, Zee Entertainment, V-Mart Retail, and Zensar Tech.

Technical Outlook Remains Cautious

The technical setup suggests continued volatility with a bearish bias. A break below the 25,000 level could open doors toward the September 30 swing low of 24,587, from where the Nifty had begun its move toward record highs. The current market structure indicates that any recovery attempts lack the conviction needed for a sustained upward move, making defensive positioning prudent for traders and investors.