The dominant driver of the week’s decline was the sudden escalation in US tariffs, with the US President announcing a 50% levy on Indian goods. The RBI’s decision to maintain the policy rate at 5.50% with a neutral stance, signaling near-term uncertainty, failed to lift sentiment.
The Nifty breached Thursday’s low of 24,344, giving up all the recovery seen from the previous day’s low. Moreover, the index has now closed decisively below its 100-day DEMA, currently placed at 24,590.
This is significant as the Nifty had already slipped below its 20- and 50-day DEMAs earlier. A close below the 100-day DEMA signals a positional downtrend, indicating a more pronounced shift in market sentiment beyond short-term weakness.
Factors that are likely to impact movement when markets reopen this week:
1) Q1 earnings
The earnings season is nearing its end, with key results due from Ashok Leyland, ONGC, IOC, Hindalco Industries, BPCL, and others, which could drive stock-specific action.
2) Domestic data
In the coming week, attention will turn to domestic CPI and WPI inflation readings.
3) India–US trade talks
Developments in US–India trade relations will remain in focus amid ongoing discussions over a trade agreement.
4) Technical factors
The Nifty’s close below 24,450 has increased the risk of further correction, with immediate support near 24,200—the 200-day EMA—followed by 23,950. On the upside, resistance is expected around 24,600–24,800, with a stronger hurdle at 25,200.
“Broader market indices remain vulnerable given their higher beta to FII outflows, while the advance–decline ratio continues to signal weak breadth. Any rebound is likely to be short-lived unless accompanied by easing trade tensions and a reversal in FII flows,” said Ajit Mishra, SVP – Research at Religare Broking.
5) FII/DII activity
FIIs turned buyers in Indian equities. On Friday, foreign institutional investors recorded net purchases worth Rs 1,850.55 crore, while domestic institutional investors bought a net Rs 7,437.36 crore.
6) Crude prices
Crude oil remains under pressure due to rising inventories, which could also influence market sentiment this week.
7) INR movement
The rupee traded weak as ongoing US tariff concerns weighed on sentiment. With an existing 25% tariff in place and an additional 25% proposed, pressure on the currency remains elevated.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)