F&O Talk| Nifty slides nearly 3% to erase 60% of 3-week gains; 6 red sessions push index near 24,400. Is 24k next? Sudeep Shah explains

Equity markets witnessed sharp selling pressure this week, with benchmark indices plunging over 2.5%, snapping a three-week winning streak. Sentiment remained weak from the outset, and selling momentum accelerated in the final session. As a result, both Nifty and Sensex closed near their weekly lows, at 24,654.70 and 80,426.46, respectively.

Global trade tensions dictated market mood, as worries over new H-1B visa regulations raised fears of an impact on IT services exports. Accenture’s muted guidance added to the drag on the IT sector, while reports of fresh tariffs on branded drugs pushed bulls firmly onto the back foot by the week’s close. The pressure was further compounded by foreign institutional investors (FIIs) turning net sellers, withdrawing over ₹5,500 crore from equities.

With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ET Markets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

After a 3-week rally, the market took a hit this week, erasing the gains from the last 2 weeks. What’s your view here?

The benchmark Nifty index has witnessed a sharp decline of 2.65% in the past week, erasing more than 60% of the gains accumulated over the previous three weeks. The fall from the recent high was much faster, as the index tumbled by nearly 800 points in just seven trading sessions. This marks the longest losing streak since March 2025, with the index closing in the red for six consecutive days — a clear indication of intensifying bearish sentiment across sectors.

The most significant drag came from the Nifty IT index, which nosedived nearly 8% during the week. The sell-off was triggered by an announcement from U.S. President Donald Trump, who proposed a hefty $100000 fee for new H-1B visa applications. This move has raised serious concerns for Indian IT companies. The announcement sparked a wave of selling in frontline tech stocks, with investor sentiment turning sharply negative. Adding to the woes, on Friday, Trump also declared a 100% tariff on pharmaceutical imports, further dampening outlooks for export-oriented sectors like pharma.From a technical standpoint, during the week, Nifty has breached key moving averages — the 20-day, 50-day, and 100-day EMAs — all of which are now trending downward. Moreover, the daily RSI has broken below its rising channel and slipped under the 40 mark, reinforcing the bearish momentum and signalling potential for further downside.Going ahead, the last line of defence, i.e., the 200-day EMA zone of 24400-24350, will act as crucial support for the index. Any sustainable move below the 24350 level could trigger further correction toward the 24000 mark. On the upside, resistance has now shifted lower to the 24850–24900 zone, which will be key for any recovery attempt.

The same is the case with Nifty Bank. What are the views there and the key levels to watch?

The banking benchmark index, Bank Nifty, also came under pressure last week, registering a decline of nearly 2% and closing below the 54400 mark. From its recent swing high of 55835, the index has slipped over 1400 points in just seven trading sessions, reflecting a swift correction in banking stocks.

On the weekly chart, Bank Nifty has formed a sizeable bearish candle, indicating strong selling momentum and a shift in short-term sentiment. Technically, the index has breached its 20-day, 50-day, and 100-day EMAs, all of which are now sloping downward — a sign of weakening trend structure.

Adding to the bearish setup, the daily RSI is on the verge of slipping below the 40 mark and remains in a falling trajectory. This suggests that momentum is deteriorating and the index may struggle to find immediate support unless broader sentiment improves. The current structure points to caution in the banking space.

Talking about crucial levels, the 200-day EMA zone of 53800–53700 will act as a key support for the index. Any sustainable move below 53700 could trigger a sharp correction toward the 53000 level. On the upside, the resistance has now shifted lower to the 54700–54800 zone, which will act as a crucial hurdle for any recovery attempt.

What are your views on the upcoming October expiry? How has it traditionally played out?

Tracking seasonality, over the past 18 years, the October month has often exhibited a bullish trend for Nifty. On 13 occasions, the index has concluded on a positive note with an average gain of 4%, while on 5 occasions, it has ended on a negative note with an average loss of 11.48%.

The average return for Nifty in the October series has been -0.30%. Over the past 18 years, October has consistently shown an average volatility of 10.4% for the Nifty index.

Which are the sectors to focus on this season?

Nifty IT: The Nifty IT has witnessed a sharp correction in the last week. It has tumbled by nearly 8%. It has given a horizontal trendline breakdown on a daily scale. Notably, it has fallen below its 200-week EMA level. The weekly and daily RSI slipped below the 40 mark and it is in a falling mode. Hence, it is likely to continue its southward journey in the short term.

Apart from this, Nifty Pharma, Healthcare, Consumer Durable, Financial Services, Capital Market, India Tourism, FMCG and Media are likely to underperform in the short term.

On the other hand, Nifty Metal is relatively outperforming the frontline indices.

Any specific stocks you’d like to point out for us?

Technically, LT, Ashok Leyland, Nam India and Hindustan Petroleum are looking good.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)