Equity: Bearish Engulfing Pattern Signals Caution as Nifty Tanks

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Stock Market Today: India=Pakistan Tension Tanks Broader Market

By S Jha

Mumbai, May 6, 2025 — Amid India-Pakistan tension, stock market saw a selloff in broader market. Global positive cues could not save indices from tanking to go below key pivot of 24400.

“In today’s session, the Nifty50 index formed a bearish engulfing pattern on the daily chart, a reversal signal that comes after yesterday’s inside bar formation,” said Angel Broking in a post-market note to clients.

The benchmark index ended the day with a loss of 81 points (-0.33%), settling slightly above 24,350, while Nifty Futures dropped 138 points (-0.56%), reflecting increasing nervousness among traders.

Market Breadth: Decisively Negative

Market breadth was sharply skewed in favor of declines:

Nifty 50: 19 advancers vs. 31 decliners
Nifty 500: Just 75 stocks ended in the green, while a heavy 424 closed lower, indicating broad-based weakness.

Sectoral Snapshot: Auto Alone in the Green

Auto was the only sector to close in the green, showing resilience amid a sea of red.
PSU Banks bore the brunt of the selling, plunging 4.84%, led by a sharp decline in Bank of Baroda.
Realty fell 3.58%, while Pharma, Banking, and Oil & Gas all dropped more than 1%.

Volatility Watch: India VIX Rising

“India VIX jumped 3.60% today and has now gained nearly 12% over the last five sessions. This consistent rise in volatility suggests that market sentiment is turning increasingly cautious, especially with key earnings and macro data on the horizon,” added Angel Broking in its note.

Technical Levels to Watch

Resistance: The 24,550–24,600 zone remains a key hurdle, aligning with the 61.8% Fibonacci retracement level—a zone often watched for potential reversal.
Support: Immediate support lies at 24,200, while the 24,000–23,800 band acts as a crucial positional support, bolstered by the 200-day SMA and prior breakout levels. Dips to this zone may attract buying interest in line with the broader bullish trend.

“Despite a firm start driven by positive cues from Asian peers, the Nifty failed to hold above 24,500. Selling resumed in the second half as traders remained cautious amid lackluster global sentiment,” added Angel Broking. Nifty eventually ended 0.42% lower, underscoring the persistent weakness.

Global Cues Mixed

US markets closed marginally in the red overnight.
Europe mirrored the decline, staying subdued.
However, Asian markets bucked the trend, closing with gains, offering some intraday support to domestic indices.

Stock-Specific Action: Angel’s Picks

Bank of Baroda: Crashed 10.12%—its sharpest single-day fall since June 2024. Open Interest surged 11.52% with a 542% spike in contracts, signaling fresh short positions. The stock closed at a 1-month low, confirming strong bearish sentiment.
Ccl Products Ltd.: Opened with a massive gap-up and soared over 17% on 170x average volume, marking a clean breakout. RSI at 70 suggests strong momentum.
Poly Medicure Ltd.: Climbed 7.34% with a significant jump in volumes. The RSI at 72 supports continued bullishness as the stock closes near a 4-month high.
Ceat Ltd.: Hit a fresh all-time high, forming a rare Three White Soldiers pattern on the monthly chart. RSI at 81 points to overbought conditions, but trend strength remains intact for now.
The Indian Hotels Co.: Slipped below its 10/20/50/100-day EMAs, with RSI at 39, indicating weak momentum and potential further downside.

Outlook

“The sharp rise in volatility, weak market breadth, and failure to sustain above key levels suggest that the Nifty may continue consolidating unless 24,600 is convincingly taken out,” added the brokerage firm.

It further stated that “traders are advised to remain cautious with long positions, while selective buying on dips near key support zones may offer opportunity in line with the broader trend”.

(Disclaimer: This article makes no reccomendation for buy or sell of shares of any company)

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