Trade Setup for January 9: Nifty may remain under pressure unless it moves back above 26,000

Indian equities saw a sharp sell off on Thursday, with the Nifty 50 slipping below all key technical levels. The benchmark index also fell below its short term 21-day and 50-day moving averages, both placed around the 26,000 mark, levels that bulls had managed to defend despite losses over the previous three sessions.

After a weak start, the Nifty remained under pressure for most of the session. A brief intraday recovery in the latter half failed to sustain, with the index ending the day near its lows, down 263 points.

The sharp fall erased more than ₹8 lakh crore in investor wealth during the session.

Selling pressure was not limited to the frontline index. Broader markets also witnessed a downturn, with all sectoral indices ending in the red. Metal stocks led the losses, while even the otherwise resilient Nifty Bank index came under pressure.

Heavyweights such as Reliance Industries, HDFC Bank and TCS continued to weigh on the benchmark.

These stocks had capped any meaningful recovery in the Nifty earlier in the week and emerged among the top contributors to Thursday's decline. RIL, Infosys and TCS together accounted for nearly 90 points of the Nifty's fall.

Adding to the weak sentiment is the continued lack of clarity on a potential India-US trade agreement, even nine months after US President Donald Trump's Liberation Day announcements. This is despite repeated assertions by Prime Minister Narendra Modi and President Trump about strong bilateral ties.

The uncertainty triggered sharp selling in export oriented stocks, including textile players such as Gokaldas Exports and shrimp feed makers led by Avanti Feeds.

Many of these companies derive nearly 50% to 70% of their revenues from the US market.

Siddhartha Khemka of Motilal Oswal said markets are likely to remain under pressure in the near term, citing concerns around US tariffs, ongoing geopolitical tensions and weak global cues.

Nagaraj Shetti of HDFC Securities said the decisive break below key supports signals a short term trend reversal on the downside. He added that the next crucial support lies around 25,700, while immediate resistance is placed at 26,000.

LKP Securities' Rupak De said selling pressure could persist unless the Nifty manages to move back above the 26,000 level. On the downside, he sees the index drifting towards 25,700 and 25,550.

According to Nilesh Jain of Centrum Broking, the short-term structure remains sideways to weak as long as the Nifty trades below 26,000. Immediate support is seen at 25,800, followed by 25,720.

Rajesh Bhosale of Angel One said the next session will be critical, as sustained trading below 25,900 could open the door for further downside in the coming days. He identified 25,700 as a key support level, coinciding with the December swing low and the 89 day exponential moving average, followed by 25,500.

On the upside, the 26,000 to 26,100 zone, aligned with the 20 day exponential moving average, is seen as immediate resistance. Unless the index reclaims this zone, markets are likely to remain under pressure, he added.