Trading setup for today: What to expect from the stock markets?

The stock markets have been facing pressure recently, with foreign investors pulling out significant funds. Last week marked the second consecutive week of losses, as both the Sensex and Nifty declined by nearly 2%.
This correction has brought the markets to levels not seen in recent years. The Nifty, after a brief recovery attempt on Monday, fell throughout the week, closing below the crucial 23,550 mark. This steep correction, the sharpest since the pandemic, has seen prices fall more than 10% from all-time highs, breaking multiple key support levels.
Market analyst Sameet Chavan from Angel One said that the Indian equity markets extended their losses, with the benchmark indices dropping over 2.5% on a weekly basis. The Nifty ended the week near its 200-day simple moving average (DSMA), indicating ongoing pressure.
Foreign portfolio investors (FPIs) were net sellers last week, pulling out Rs 1,850 crore in the cash market. Additionally, they sold Rs 405 crore in index futures, increasing open interest and signalling more short positions.
In the derivatives market, significant open interest (OI) at the 23,500 put option indicates some support at this level. However, resistance is visible in the 23,550–23,600 call option range. Analysts warn of increased volatility and advise traders to avoid aggressive positions.
With earnings season mostly over, the focus this week is expected to shift to foreign investor flows and global cues. Ajit Mishra, Senior VP of Research at Religare Broking, advises a ‘sell on rise’ strategy in the short term. For long-term investors, accumulating fundamentally strong stocks may be a good approach during this correction.
GIFT Nifty: The GIFT Nifty, formerly SGX Nifty, hinted at a negative start to Monday, trading 110 points lower at 23,491.
US Markets: Wall Street ended lower on Friday, with the S&P 500 and Nasdaq posting their largest one-day losses in two weeks. Concerns about slower interest rate cuts and global economic conditions weighed on sentiment.
Asian Markets: Early Monday trading in Asia showed declines. Japan’s Topix dropped 0.7%, Australia’s S&P/ASX 200 fell 0.3%, and Euro Stoxx 50 futures were down 0.7%.
India VIX: The volatility index fell 4.8% last week, settling at 14.78.
Rupee Performance: The Indian rupee closed at its weakest level of Rs 84.39 against the US dollar on Thursday, despite some support from state-run banks’ dollar sales.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)