Markets Retreat Ahead of Fed Decision Amid Congestion Trades

Spread love

The Bank Nifty index briefly breached the psychological 56,000 mark in early trade but failed to close above it, suggesting further downside risk

By S JHA

MUMBAI, June 17, 2025 — Indian equity markets witnessed a cautious pullback on Tuesday as traders adopted a wait-and-watch approach ahead of the US Federal Reserve’s interest rate decision scheduled for tomorrow. Geopolitical tensions and mixed global cues further contributed to a subdued trading session.

The Nifty 50 failed to sustain above the key resistance level of 25,000, retreating to close near 24,850, down 0.37%. The index found temporary support at its 20-day Exponential Moving Average (EMA) of 24,800, a critical level that may cushion near-term declines. The broader Sensex also moved within a narrow range, echoing the sentiment of limited buying interest.

According to market experts at StockEdge, the Bank Nifty index briefly breached the psychological 56,000 mark in early trade but failed to close above it. Instead, it slipped below its 20 EMA to settle at 55,739, suggesting further downside risk.

“Despite today’s weakness, the Nifty holding above the 20-day EMA gives bulls some breathing room. However, strong resistance persists at 25,000–25,100, and only a decisive move above that range could trigger renewed momentum,” said analysts at Angel One.

Sectoral Performance: IT Gains, Pharma & Metals Lag

Among sectoral indices, Nifty IT emerged as the day’s top gainer, rising 0.6%, bolstered by strength in heavyweight counters like Tech Mahindra, which surged 1.5%. On the other hand, Nifty Pharma came under heavy selling pressure, reversing last week’s gains after failing to break above its 200-day SMA. The index slipped below its 20-day EMA, raising concerns of continued weakness. Nifty Metal also declined over 1%, adding to the drag.

Out of the 50 Nifty constituents, only 12 stocks closed in the green, reflecting weak market breadth. Adani Enterprises was the worst performer, shedding 2.2%.

Derivatives & Volatility

Nifty futures saw a decline of 137 points, outpacing the 93-point drop in the spot market. This narrowed the futures premium to just 6 points, while a 1.7% increase in open interest pointed to a buildup of short positions. Meanwhile, India VIX slipped 3%, indicating a slight easing in market volatility.

Stock Highlights

Navin Fluorine International Ltd. jumped over 4%, posting its highest daily close since 2023 and confirming a chart breakout.
Aditya Birla Capital rallied to a new all-time high, its first since 2017, after breaking key multi-year resistance levels.
CG Power and Industrial Solutions Ltd. secured a ₹641 crore order from Power Grid for 765/400 kV transformers.
Hindustan Zinc announced a capital expenditure of up to ₹12,000 crore to establish a 250 KT integrated zinc complex at Debari.
Vishal Mega Mart rose 1.5% after its promoter Samayat Services announced plans to offload a 10% stake worth ₹5,057 crore via a block deal.

Outlook

“Technically, the 24,800–24,750 zone remains a crucial support for the Nifty, while 24,600–24,500 is expected to offer a stronger base if selling persists. On the upside, the index must decisively break past the 25,000–25,100 barrier for sustained bullish momentum,” ADDED Angel One in a note to clients.

With the Fed’s rate decision looming and global markets still on shaky ground, traders are likely to remain cautious in the coming sessions.

(Disclaimer: This article makes no recommendation for any kind of trades in the stock market)

Follow The Raisina Hills on WhatsApp, Instagram, YouTube, Facebook, and LinkedIn