The broader development of the market stays cautiously bearish, however oversold indicators from the symptoms and the proximity to key help zones counsel a possible bounce could also be on the playing cards.
Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Analysis, SBI Securities interacted with ET Markets relating to the outlook on Nifty and Financial institution Nifty together with an index technique for the upcoming week. Following are the edited excerpts from his chat:
What’s the present tackle Market?
The benchmark Nifty index prolonged its shedding streak for the sixth consecutive week, marking its longest stretch of weekly declines for the reason that COVID-19 market crash in 2020. This persistent weak spot underscores the prevailing bearish sentiment available in the market. What stands out technically is that for the fourth week in a row, the index has shaped a bearish candle with an extended higher shadow. This formation indicators that each try at a rally is being met with robust promoting stress, indicating an absence of conviction amongst bulls and a transparent dominance of bears at greater ranges.
Through the week, market sentiment weakened additional after U.S. President Donald Trump imposed a 25% tariff on Indian items, escalating commerce tensions over India’s Russian oil imports. The temper was additional dampened by weak Q1 earnings throughout key sectors and continued FII promoting, which added to the stress on equities.
From a technical standpoint, the Nifty index continues to exhibit pronounced weak spot. It’s now comfortably buying and selling beneath its 20-day, 50-day, and 100-day EMAs, all of that are sloping downward — a transparent signal of sustained bearish momentum. Including to the unfavorable outlook, the RSI on the each day chart has entered an excellent bearish zone, as per RSI vary shift rules.
Additional affirmation comes from the MACD indicator, which stays in bearish territory. The MACD line is quoting beneath each its sign line and the zero line, reinforcing the downtrend and indicating that promoting stress continues to dominate. General, the technical setup paints a cautious image for the close to time period, with rallies prone to face resistance and promoting rising at greater ranges.
Speaking about essential ranges, the zone of 24200-24150 will act as vital help for the index as it’s the confluence of the 200-day EMA stage and 38.2% Fibonacci retracement stage of its prior upward rally (21743-25669). If the index slips beneath the 24150 stage, then it’s prone to lengthen its southward journey upto the 23750 stage. On the upside, the 100-day EMA zone of 24570-24600 will act as an important hurdle for the index.
How has the August collection performed out thus far? How has it been traditionally for the Indian market?
Monitoring seasonality, over the previous 18 years, the August month has usually exhibited a combined development for Nifty. On 9 events, the index has concluded on a constructive be aware with a mean acquire of three.68%, whereas on 9 events, it has ended on a unfavorable be aware with a mean lack of 4.45%. The common return for Nifty within the August collection has been -0.39%. Over the previous 18 years, August has persistently proven a mean volatility of seven.30 p.c for the Nifty index.
Traditionally, Financial institution Nifty has additionally proven a combined development in August over the previous 18 years. Out of those, it closed positively 9 instances, with a mean acquire of three.57%, whereas ending negatively 9 instances, with a mean lack of 6.30%. The common return for Financial institution Nifty within the August collection has been -1.37%. Nonetheless, Financial institution Nifty has demonstrated a mean volatility of roughly 10.08 p.c for the previous 18 years.
Are Trump’s tariffs prone to additional dampen the sentiment?
Sure, Trump’s tariffs are prone to additional dampen market sentiment, particularly given the already fragile investor temper. The imposition of an extra 25% tariff on Indian items provides a layer of geopolitical and commerce uncertainty, which may weigh closely on sectors instantly impacted by exports to the U.S.
Nonetheless, it is vital to notice that the efficient date of the tariffs is August 27, and till then, markets could stay unstable as buyers carefully monitor developments round potential negotiations or diplomatic responses. Any indicators of easing tensions or backtracking on the choice may assist restrict the draw back, however for now, the transfer provides to the listing of headwinds dealing with the market.
What’s your tackle Financial institution Nifty? What are the important thing ranges to look at?
The banking benchmark index Financial institution Nifty additionally ended the week on a unfavorable be aware, reflecting continued weak spot within the monetary house. On the weekly chart, it shaped a bearish candle, indicating persistent promoting stress. During the last two classes, the index has been hovering close to its 100-day EMA.
Going ahead, the 100-day EMA zone of 54950–54850 will probably be a essential help space. A sustained transfer beneath 54850 may intensify the downtrend, opening the gates for a decline towards the following help zone of 54000–53900. On the upside, any restoration is prone to face resistance close to 55700–55800, which now acts as a key hurdle for the bulls.
Any hopes from the FII now? What do the money section in addition to the FII long-short ratio point out?
Given the present information, hopes from FIIs stay restricted within the close to time period. Month-to-date, FIIs have bought equities price 14018.87 crore, reflecting a transparent risk-off method amid international uncertainties and home headwinds.
Moreover, the FII long-short ratio for index futures stands at simply 8.28%, the bottom in current durations, indicating a closely bearish positioning. This means that FIIs are predominantly holding quick positions, reinforcing their cautious outlook on Indian equities.
Nonetheless, from a contrarian perspective, such a particularly low long-short ratio may additionally sign that the market is oversold within the quick time period, and any constructive set off — corresponding to easing international tensions or beneficial home cues — may result in quick overlaying, leading to a pointy rebound.
What’s the view on Auto and Pharma shares?
Nifty Auto: The Nifty Auto index has been consolidating within the 24226–22916 vary for the previous 59 buying and selling classes, displaying resilience amid broader market weak spot. It has outperformed frontline indices just lately and prevented important correction throughout the broader market decline. The ratio chart vs. Nifty is at a 24-week excessive, highlighting relative power. Technically, the index is buying and selling above its 100 and 200-day EMAs, indicating a constructive undertone. Nonetheless, momentum indicators stay sideways, suggesting an absence of robust directional bias. Going ahead, a break above 24000 may set off a pointy rally, whereas the 200-day EMA zone of 23100–23050 will act as essential help on the draw back.
Nifty Pharma: The index has slipped beneath its 200-day EMA for the primary time since Could 2025, signaling a possible shift in its long-term development. Including to the bearish tone, the each day RSI has entered an excellent bearish zone, as per RSI vary shift rules, indicating weakening momentum and an absence of shopping for curiosity. Given these developments, the index is prone to lengthen its downward trajectory over the following few buying and selling classes. On the draw back, the help zone of 21100–21000 will probably be essential. A breach beneath this stage may speed up promoting stress and deepen the correction.
How is the IT sector trying proper now?
The Nifty IT index continues to exhibit a bearish development, characterised by a constant sample of decrease highs and decrease lows. It stays beneath key transferring averages, indicating sustained weak spot in momentum. Moreover, the each day RSI is firmly positioned within the bearish zone, as per the RSI vary shift framework. Given these technical indicators, the index seems poised to increase its downward trajectory over the approaching buying and selling classes.
Are there any shares to take defensive bets because the indices appear tough to commerce?
Technically, Kajaria Ceramics, Affle, and Pidilite Industries are trying good.
(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t symbolize the views of The Financial Occasions)
