Trade Setup for March 3: Focus on positive Q3 GDP data, global markets

The Indian stock markets wrapped up February on a painful note, marking one of the worst months in recent memory. The four-day trading week wiped out nearly ₹20 lakh crore in investor wealth, with the Nifty struggling to hold onto key support levels.

February's trading data paints a grim picture—out of 20 trading sessions, only two closed in the green. The continuous selloff and weak global cues have further eroded investor confidence as we enter March.

Market Overview: Nifty and Broader Indices Under Pressure

The Nifty’s downward trajectory has left no support level intact. Initially, 22,800 was expected to hold firm, but once breached, the focus shifted to 22,500, which too was convincingly broken on Friday. Now, analysts are watching 22,000 and 21,800 as the next key support levels. A breach of 21,800 would erase all gains made since June 4, 2024—the day the Lok Sabha election results were announced.

The broader market has suffered even more. The Nifty Midcap index has dropped 22% from its peak, while the Nifty Smallcap index has shed 25%. On Friday alone, 88 stocks in the Midcap index and 94 stocks in the Smallcap index ended in the red.

Key Market Factors to Watch on Monday

India’s GDP Data: February’s GDP figures met expectations at 6.2%, providing some economic stability.

Auto Sales Data: Market participants will assess February’s auto sales numbers for signs of demand resilience.

Global Markets: While the US markets ended higher on Friday, experts attribute this to index rebalancing and adjustment-related buying rather than fundamental strength.

FII & DII Activity: Despite inflows from MSCI rebalancing, foreign institutional investors (FIIs) were heavy sellers on Friday, while domestic institutional investors (DIIs) remained net buyers.

Expert Views on Market Sentiment

Jai Bala, Cashthechaos.com:

Prefers to stay in cash until the market shows clear signs of bottoming out.

Highlights that the market being oversold in a bull phase is a sign of weakness.

Dipan Mehta, Elixir Equities:

Believes current valuations make midcap and smallcap stocks attractive for long-term investors.

Sees potential for growth revival with government and RBI measures.

Pankaj Tibrewal, IKIGAI Asset Manager:

Attributes the sharp correction to investor sentiment and inexperience with such downturns in recent years.

Considers the current market levels a strong long-term buying opportunity.

Nifty Bank: The Lone Outperformer but Still Facing Downside Risk

While Nifty Bank declined 400 points on Friday, it fared slightly better than the broader market. The index is now eyeing 48,000 as its next support level, though it remains over 3,000 points above its 52-week low of 45,828 from March 2024.

Technical analysts highlight key levels:

Om Mehra, SAMCO Securities: Notes that the RSI below 40 and negative MACD crossover indicate continued downside risk.

Hrishikesh Yedve, Asit C Mehta Investment Intermediates: Identifies 49,000 as strong resistance and 47,840 as key support for potential trading opportunities.

Outlook: Will the Market Stabilize?

Given the persistent weakness and lack of strong buying support, traders and investors remain cautious. Market sentiment will hinge on global cues, institutional activity, and macroeconomic data in the coming sessions. Until a clear reversal pattern emerges, experts advise patience over impulsive buying.