1 day ago
It was another challenging week for the Indian equity market, with the benchmark Nifty 50 index falling 1.1%, extending its losing streak to five straight weeks, the longest in two years. The last time the index saw such a prolonged decline was between July 23 and August 20, 2023.
During the week, the index faced resistance at its 50-day exponential moving average (EMA) and resumed its downward trajectory.
The ongoing weakness was driven by persistent concerns over tariffs and broader macroeconomic developments during the earnings season.
The Nifty attempted to stabilise early in the week, but sustained selling pressure eventually took over, pushing the index lower ahead of the weekend.
In the final session of the week, the Nifty fell 203 points, breaching a key support level at the previous swing low of 24,598. It closed the day at 24,565.
During Friday's sharp correction, Trent, Eicher Motors and Asian Paints led the charge among the Nifty's top performers. Conversely, it was a particularly tough session for the pharmaceutical sector, with Sun Pharma and Dr. Reddy's, along with Adani Enterprises, ending as the major losers within the Nifty pack.
The negative sentiment was pervasive across the market. Barring Nifty FMCG, which managed to stay afloat, all other sectoral indices ended in the red. The hardest hit sectors were Nifty Pharma, Healthcare, Metal, and IT.
The underperformance in the broader market continued unabated. The Nifty Midcap 100 fell 1.3%, while the Nifty Smallcap 100 index plummeted by 1.6%.
Foreign investors were net sellers in the cash market on Friday, while domestic investors were net buyers.
In the week ahead, markets will closely track developments around the India-US trade deal, as policymakers are expected to respond diplomatically ahead of the next scheduled discussions.
On the domestic front, all eyes will be on the Reserve Bank of India's monetary policy meeting on August 8, where the central bank’s commentary on inflation, liquidity, and growth outlook will be keenly watched.
According to Nagaraj Shetti of HDFC Securities, the Nifty is currently hovering near a crucial support level around 24,500-marked by multiple swing lows from May to late June. However, a sustainable recovery from this support has yet to materialise.
Shetti said that the underlying trend remains weak. "A decisive move below 24,500 could drag the Nifty down to the next support zone of 24,100-24,000 in the near term. Immediate resistance is seen at 24,950."
Rupak De of LKP Securities pointed out that the index has broken below its recent consolidation support at 24,600 on the daily chart.
He added, "Sentiment remains weak, with the correction likely to extend towards 24,400-24,450. A further decline is probable if the index slips below 24,400; otherwise, some recovery could be expected. On the upside, resistance is placed at 24,600-24,650 and 24,850."
Nandish Shah of HDFC Securities said the index is continuing its downtrend. "The next support band is between 24,450-24,500, with the potential to fall further towards 24,170-24,200 if this zone is breached. On the upside, recovery attempts may face resistance at 24,800 and 25,000."
Adding to the cautious outlook, Rajesh Bhosale of Angel One said the recent breakdown below the 100-day EMA has raised significant concerns, indicating vulnerability and a rather bleak intermediate-term outlook for the benchmark index.
