The Nifty 50 faced intense selling pressure on January 9, losing 700 points from its record high achieved earlier in the week. The benchmark index closed 194 points (0.75%) lower at 25,683, marking its lowest closing level since November 10. During the session, the Nifty hit a day's low of 25,623, marginally above the 100-day EMA at 25,618, before recovering slightly by close.

Technical Analysis Shows Bearish Momentum

The index formed a long red candle and closed below the lower Bollinger Band, extending its correction throughout the week. This resulted in a substantial weekly loss of 645 points (2.45%). Technical indicators have turned decisively bearish across multiple timeframes.

The momentum indicators have generated sell crossovers on both daily and weekly charts. The RSI fell below 40 to 38.55, while the MACD remained below the reference line with a further weakening histogram. On the weekly scale, the MACD turned bearish with the histogram declining below the zero line for the first time since the October 6-10 week.

Key Support and Resistance Levels

Analysts have identified crucial levels for the Nifty's near-term movement. If the index sustains below 25,700, the immediate support lies at 25,580 (20-week SMA), followed by the critical support zone of 25,400-25,300.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, "A long bear candle was formed on the weekly chart, which signals a sharp reversal in the market after the consolidation movement of the past few weeks. A slide below the support of 25,700 could open further decline down to 25,400 in the coming week."

Bank Nifty Enters Bearish Phase

The Bank Nifty also succumbed to selling pressure, declining 435 points (0.73%) to 59,252. The banking index fell decisively below short-term moving averages and the midline of the Bollinger Bands, accompanied by above-average volumes. For the week, Bank Nifty shed 899 points (1.5%) and formed a long red candle on the weekly timeframe.

Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, noted that "the rising trendline zone of 59,100-59,000 will act as immediate support. Any sustained move below the 59,000 level could lead to the index extending its weakness further down towards the 58,500 level."

Volatility Index Signals Caution

The India VIX jumped 3.07% to 10.93, extending its upward journey for the second consecutive session and reaching a one-month high. The volatility index surpassed its medium-term moving average, signaling increasing caution among market participants. This elevated VIX level indicates heightened uncertainty and suggests that market discomfort may increase further if it approaches long-term moving averages.

Weekly options data revealed that 25,500 is expected to act as crucial support, with strong resistance at 26,000. Maximum Call open interest was concentrated at the 26,000 strike, while maximum Put open interest was placed at the 25,500 strike, reflecting the market's current sentiment and expected trading range.

The Indian stock market's losing streak extended to five consecutive trading sessions on January 9, with the Nifty 50 declining 0.80% to reach a daily low of 25,665. The benchmark index has faced significant selling pressure, cumulatively losing 663 points or 2.50% over the five-day period, representing its worst weekly performance in more than three months.

Market Performance Overview

The following table summarizes the recent market decline:

Despite beginning the year on a positive note with the Nifty 50 scaling a fresh record high of 26,273, market optimism quickly dissipated. Investor confidence in Asia's third-largest economy has been shaken by multiple factors, causing local equities to underperform their Asian peers in early January.

US Tariff Concerns Drive Selling Pressure

Fresh tariff warnings from the US administration have emerged as a primary concern for market participants. The US has warned of higher tariffs on Indian exports if India continues purchasing Russian oil. A bipartisan US bill proposing tariffs of up to 500% on countries buying Russian oil has received backing and awaits congressional approval.

The escalating trade tensions have resulted in significant foreign portfolio investor outflows:

The US had previously imposed an initial 25% tariff, followed by an additional 25% tariff on India due to Russian oil purchases, which Washington views as helping to fund Russia's conflict in Ukraine. These fresh warnings appear to have further dampened market sentiment as they could delay potential trade agreements between the two countries.

Historical January Weakness

January has historically proven challenging for Indian equities, with the Nifty 50 closing lower in each of the past five years. The month typically sees increased market activity as companies release business updates alongside their December quarter results, contributing to cautious sentiment among investors.

US Supreme Court Verdict Awaited

Market participants are closely monitoring the US Supreme Court's expected ruling on tariffs imposed by the US administration on trade partners. The court scheduled January 9 as an "opinion day," marking the first opportunity for a ruling on the tariff measures. Market experts suggest the verdict details will be crucial in determining the subsequent market reaction, particularly regarding whether tariffs would be partially or completely struck down.

Investment Outlook

Despite the current market weakness, analysts note that segments including financials, consumer discretionary, and industrials have corrected due to overall market pressure rather than fundamental concerns. These sectors may present opportunities for long-term investors, though consultation with certified experts remains advisable before making investment decisions.