Market Setup: Global Sell-off Triggers Gap Down Alert; Watch 25,800

Good Morning. The setup for today looks Bearish.

The Lead: Nifty is set to open Gap Down, tracking a sharp correction in US markets and weak Asian cues. With GIFT Nifty trading significantly lower, the index is likely to give up the psychological 26,000 mark at the open.

Global Context: US markets faced a brutal sell-off on Friday, with the Nasdaq plunging 1.69% and the S&P 500 dropping 1.07%. The decline was triggered by renewed “AI Bubble” fears, as investors aggressively booked profits in tech heavyweights like Broadcom and Oracle, overshadowing the recent Fed rate cut optimism. Asian markets have followed suit, with the Nikkei drifting lower, signaling a risk-off sentiment across the region.

Strategy for the Day: With Nifty closing at 26,047 on Friday, a gap-down opening is expected to test the bulls’ resolve.

• The Plan: Do not chase the gap down immediately. The market is reacting to global tech weakness, but domestic liquidity remains strong.
• Key Level: Watch 25,800 closely. This is a critical support zone (Previous Nifty Close - ~250 pts range buffer).
• Trade:
  • Long: If Nifty stabilizes near 25,800 - 25,850 and shows price rejection (wicks), initiate long positions for a bounce back to 26,000.
  • Short: Aggressive shorts should only be considered if Nifty breaks and sustains below 25,750, opening the door for 25,600.

Sectors to Watch:

• IT (Bearish): The 1.7% crack in Nasdaq is a direct negative for TCS, Infosys, and HCL Tech. Expect initial selling pressure here.
• Paints & Tyres (Weak): With Crude Oil inching up (+0.51%) and Asian Paints already showing weakness on Friday, this sector may remain under pressure.
• Metals (Neutral/Bullish): Tata Steel was a top gainer on Friday. Watch if the sector can decouple from the general market weakness, acting as a defensive hedge.

Verdict: The trend is temporarily broken. Respect the gap, wait for the first 15 minutes to settle, and watch 25,800 for the next big move.