The Indian stock market experienced a significant downturn last week, ending a two-week streak of gains as rising global trade tensions spurred by Donald Trump’s recent tariff hikes rattled investors both in India and abroad. The benchmark indices, Sensex and Nifty 50, faced considerable pressure from negative global signals and renewed fears of an escalating trade war. By the end of the week, the Nifty 50 settled at 22,904.40, while the Sensex closed at 75,364.69, nearing its weekly low.
Market Performance Overview
The week saw a steep decline in major indices, with the BSE Sensex falling by 2,050.23 points, or 2.64%, and the NSE Nifty down by 614.8 points, or 2.61%. Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd., noted, “After a phase of consolidation, the Indian equity markets faced a sharp downturn, primarily driven by weak global cues and renewed trade war concerns.”
Key Highlights:
- IT and Metal Sectors: Both sectors suffered the most, with declines ranging between 7% and 9%.
- Stable Sectors: FMCG, banking, and financial services provided some resilience, softening the overall impact.
- Mid- and Small-Cap Indices: These markets mirrored the larger trends, with losses between 2% and 2.6%.
Investor Sentiment and Future Outlook
Investor confidence dipped sharply following the announcement of reciprocal tariffs by the United States, which ignited fears of a worldwide trade conflict. Moreover, the downturn in U.S. markets diminished hopes for a rebound in the Indian stock market. Notably, foreign institutional investors (FIIs), who had briefly shifted to a buying stance, resumed their selling activities, amplifying the bearish sentiment.
Upcoming Influences on the Market
The forthcoming week is set to be pivotal, with several significant domestic and international events on the agenda. Investors are keeping a close watch on:
- Monetary Policy Committee (MPC) meeting on April 9
- Macroeconomic Data Releases: Including the Index of Industrial Production (IIP) and Consumer Price Index (CPI) on April 11
- Q4 Earnings Season: Starting with IT giant TCS reporting on April 10
Vinod Nair from Geojit Investments Ltd. commented, “The market’s attention is shifting towards the upcoming corporate earnings season. The outlook remains cautious, with potential downward revisions to earnings growth due to subdued demand and ongoing margin pressures.”
Technical Analysis and Market Strategy
The Nifty has recently breached critical support levels, suggesting the possibility of further declines. Mishra indicated that the immediate support for the Nifty lies at 22,600, with a significant breach potentially leading to 22,100. Conversely, any recovery attempts may encounter resistance in the 23,100–23,400 range.
Regarding the Bank Nifty, Mishra noted, “Interestingly, the banking index shows resilience and could continue to outperform. Immediate support is at 50,700, with stronger support around 50,000. A breakthrough above 52,800 could lead to new highs.”
Trading Insights for the Upcoming Week
Mishra recommends adopting a “sell on rise” strategy for the Nifty until a clear reversal or a retest of the 22,100 support level occurs. With the earnings season underway, stock-specific movements are likely to dominate, offering both long and short trading opportunities.
Key Trading Considerations:
- Banking and Financial Stocks: These sectors continue to show strength and may remain favorable.
- Navigating Volatility: Traders should exercise caution amidst broader market fluctuations and consider hedging strategies like index puts.
As uncertainty persists, maintaining agility and focusing on sector performance will be crucial for navigating the volatile market landscape in the days ahead.
