- Summary:
- The Nifty 50 Index future hangs on the balance as the US and India explore a potential trade deal, but the RBI too could have a say.
The Nifty 50 Index closed its first day of trading this week down by 3.2%, ending the session at 22,161 points. The decline mirrored that of the broader Indian equities market, with the other benchmark Index, the Sensex Index closing with its losses at 2.95%.
Rising risk aversion is piling pressure on equities across the world, and India finds itself in a susceptible position after the United States imposed 26% tariff on goods imported from the country. The Nifty 50 Index has declined by nearly 5% since US President announced the reciprocal tariffs last Wednesday.
India has chosen to pursue striking a trade deal with the United States, signaling that it wishes to avoid retaliation. A deal between the world’s largest and fifth-largest economies could help restore investor confidence and provide tailwinds to the Nifty 50 Index. In addition, such a deal could give India leverage over its Asian neighbours like China, Vietnam, Thailand and Bangladesh, with which it competes for the US textile, electronics and IT markets.
In addition, the Reserve Bank of India (RBI) is expected to slash interest rates by 25 basis points following its meeting on Wednesday this week. Such a move could also provide support for the Index. At its current level, the Nifty 50 Index is near lows seen in June 2024, underlining the weight carried by the trade tariff war.
Nifty 50 Index Prediction
The Nifty 50 Index pivots at 22,300 points and resistance at that level signals control by the sellers. The downside will likely find the first support at 21,759. However, an extended control by the sellers will break below that level and likely take the Index lower to test 21,536 points.
Alternatively, going above 22,300 points will signal a shift by the momentum to the upside. That will likely see the buyers encounter the first resistance at 22,580. Breaking above that level will invalidate the downside narrative. In addition, an extended control by the buyers will lead to further gains to test 22,580.
