Nifty hits key 50-day average after sharp sell-off; more losses possible

Indian equity benchmarks slipped to a crucial technical level on January 8, with both the Sensex and the Nifty touching their 50-day moving averages (50-DMA) for the first time since October, signalling growing caution among investors amid mounting global and domestic headwinds.

The Sensex fell 1 percent, or 780 points, to close at 84,180, while the Nifty declined 1 percent, or 264 points, to end at 25,877. The fall followed a sharp bout of selling driven by global cues, sectoral pressure and renewed concerns over trade and tariffs. Although both indices briefly dipped below their 50-DMA in December, they failed to sustain those losses and recovered intraday.

Market participants view the 50-DMA as a key near-term trend indicator. Independent analyst Deepak Jasani said that unless the Nifty decisively closes above the 26,000 mark — its 50-day moving average — the market could remain under pressure, with the index potentially slipping toward the 25,460 level.

The latest decline was triggered by comments from US Senator Lindsey Graham on progress around a bill aimed at penalising countries that purchase Russian oil, which rattled investor sentiment. Shares of Indian oil refiners such as Indian Oil Corporation and Hindustan Petroleum declined on concerns over potential trade and cost implications.

Capital goods stocks also came under pressure after reports suggested the removal of certain import curbs from China. Heavyweights such as BHEL and Larsen & Toubro registered losses, adding to the broader market weakness.

Analysts noted that recurring negative news across sectors has prompted investors to book profits and move to the sidelines. Other market experts said sentiment is likely to remain weak as long as the Nifty trades below 26,000 and the Sensex stays under 84,500. In such a scenario, the indices could drift toward the 25,750–25,700 zone for the Nifty and 84,000–83,700 for the Sensex. On the upside, a sustained move above these levels could trigger a pullback toward 26,075–26,100 and 84,800–85,000, respectively.

Harsimran Sahni, Head of Treasury at Anand Rathi Global Finance, said the potential impact of higher tariffs on India could extend beyond trade disruptions to broader macroeconomic challenges. He warned that tariffs could slow growth by affecting export-oriented sectors, while higher energy costs may complicate inflation management and prompt policy intervention.

Such measures, Sahni added, could influence liquidity conditions and borrowing requirements, potentially pushing bond yields higher. Analysts also pointed to rising geopolitical risks around energy security, noting that while India may explore diplomatic channels or alternative trade arrangements, uncertainty remains elevated.

Global market weakness further weighed on sentiment. Futures on the S&P 500 slipped 0.1 percent, while Nasdaq 100 futures underperformed, even after paring earlier losses following news that Nvidia may be allowed to sell its H200 chips in China.

Investors are now awaiting US payrolls data due on Friday, after recent indicators painted a mixed picture of the US economy. Employment data has shown signs of strain despite resilient business activity, while geopolitical concerns — including developments related to Greenland and Venezuela — continue to keep global markets on edge.