Indian equities are staring at the risk of a ninth straight weekly loss, with the Nifty down about 0.8% so far this week after already posting its longest losing streak in 25 years. After eight consecutive weekly losses, Nifty ended higher on Monday and Tuesday, raising expectations that the market may finally be attempting a relief bounce. That optimism faded quickly. The index snapped its two-day gain on Wednesday after the Reserve Bank of India (RBI) raised interest rates and shifted its policy stance to calibrated tightening, and selling deepened on Thursday as crude oil, US bond yields and foreign outflows again dominated sentiment.
The pressure is now back on Friday's close. If the Nifty fails to recover the week’s losses, it will mark the ninth straight weekly fall, extending a run that has already become historic.
The last eight weeks have changed the tone of the market. What began as a correction has turned into a broad risk-off move, led by foreign selling, higher crude prices, a weak rupee and rising global yields. Over the eight-week stretch, the Nifty and Sensex lost 8.7% and 8.4%, respectively. A holiday-shortened previous week saw the Nifty fall 3.1%, with crude near $100 a barrel, record foreign selling and a spike in global bond yields weighing on sentiment.
The selloff has not been limited to frontline stocks. Midcaps and smallcaps have also weakened, showing that the decline has spread beyond large-cap names. Market breadth has remained weak, and several sectors have seen sharp profit booking after a long period of expensive valuations.
Also Read:India’s great market disconnect: The economy says steady, but stocks say trouble. Which signal should investors trust?
Foreign investors have been a major drag. With the US 10-year Treasury yield hovering above 5%, the relative appeal of emerging-market equities has weakened. Higher crude prices have added to India-specific worries because they raise the risk of a wider import bill, inflation pressure and rupee weakness.
This week's price action has been frustrating for bulls. The first two sessions suggested that oversold conditions could trigger a rebound. But Wednesday's RBI policy changed the near-term reading of the market. The RBI raised the repo rate by 25 basis points to 5.5%, its first hike since February 2023, and shifted its stance to calibrated tightening, signalling that inflation and financial conditions remain a concern.
By Thursday, selling had intensified. The Nifty slipped below 22,200 and touched a fresh 52-week low of 22,181 amid rising oil prices, FII selling and weak risk appetite. Reuters also reported that Brent crude rose above $104 a barrel, while the rupee remained under pressure as oil and Asian currency weakness hurt sentiment.
Rupak De, senior technical analyst at LKP Securities, said the setup remains firmly in favour of bears. "The index extended its losses as it slipped below the previous session's low. Bears continued to dominate throughout the session, giving no respite to the bulls," he said.
He said Nifty is trading below key moving averages across hourly and weekly charts, while the RSI remains in bearish crossover and in the oversold zone. De sees support at 22,180, below which the index could fall toward 22,000. On the upside, he sees resistance at 22,350.
Ponmudi R, CEO of Enrich Money, also said the technical structure remains weak. He said the index is forming lower highs and lower lows, with 22,200-22,180 acting as the immediate support zone. A break below that range could extend the fall toward 22,000. On the upside, he sees resistance at 22,500-22,600.
Options data also reflects caution. Ponmudi said total Put open interest stood at 13.85 crore against Call open interest of 22.42 crore, with the put-call ratio at 0.62. Heavy Call open interest at 22,500 signals resistance, while strong Put open interest at 22,000 marks the next support base.
Outlook: Relief possible, reversal not yet
Not all analysts see only gloom. Hitesh Tailor, technical research analyst at Choice Broking, said the overall bias remains cautious, but with a mildly positive undertone because Nifty is still seeing buying interest at lower levels.
He said momentum indicators are showing signs of stabilisation, but stronger market breadth and wider participation are needed for any recovery to gain momentum.
V K Vijayakumar, chief investment strategist at Geojit Investments, remains cautious on large-caps because of sustained FII selling. He said with the US 10-year bond yield above 5.3%, FIIs are likely to sell on every rally, keeping Nifty large-caps under pressure for some more time.
He also said investor preference has shifted toward growth stocks, while value stocks are trading at fair valuations. A reversal, according to him, will happen only when FIIs turn buyers, and there is no clarity yet on when that will happen.
Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.
