- Summary:
- The BSE Sensex Index has recovered from virus fears but faces multi-pronged onlaught including a weake rupee and foreign institutional flight.
India’s BSE Sensex Index (INDEXBOM: SENSEX) bounced back on Tuesday, gaining 0.2% as the markets shrugged off concerns over HPMV virus fears. The Index is recovering after recording its biggest daily drop in seven months on Monday, when it lost 1.6% after India reported three cases of the virus.
The recovery is supported by easing of tension about the virus as health experts pointed out that the virus has been around since early 2000s and is a seasonal cold. The bounce back comes on a day when India’s national statistics office is expected to release GDP estimates for 2025.
Why the Sensex Index Could Struggle to Recover
Recent data has shown that the world’s fifth-largest economy could be staring at a slowdown in growth amid a high interest environment. For instance, on Monday, the country’s S&P global Services PMI reading for December came out at 59.3, below the forecast rate of 60.8.
However, analysts expect the economy to stay on the growth path. Nonetheless, investors are growing concerned that the extended decline by the rupee against the US dollar could hurt the economy. Also, RBI’s decision to retain interest rates at 6.5% in its December meeting could exacerbate the recent weakness in India’s securities market.
The Sensex Index has declined by -4.4% in the last month and the market is under pressure as Foreign Institutional Investors redirect their capital to the US amid elevated yields on US Treasury bonds.
Also, Donald Trump’s takeover of reins at the White House is likely to disrupt markets amid fears of trade tariff wars. That could slow down the recovery by the Sensex Index. However, interventionist statements by Reserve Bank of India (RBI) could help deflate investor concerns.
Sensex Index Prediction
Pivot: The BSE Sensex Index pivots at 77,903 points. Action above that level will signal control by the buyers. Otherwise, the downside could prevail.
Resistance: The first resistance could come at 78,595. Clearing that barrier could lead to further gains and drive the index to the second resistance at 79,534.
Support: The first support is likely to be at 77,565. Action below that level will invalidate the upside thesis. Extended control by the sellers could send the index lower to test 77,022.
