Global cues remain negative with the Iran-Israel war entering the fourth week. The energy prices remain elevated with Brent hovering near the $113 a barrel mark. For domestic markets, persistent FII outflows and rupee weakness remain a growing concern.
Fear index India settled at 22.81 on the NSE in the last session, mildly up by 0.04%.
Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets 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:
Q: Nifty ended mildly negative at 0.2% WoW, narrowing its losses through Friday gains as the bull started emphatically but lost momentum towards the end. Was it short covering or do you see the trend continuing next week as well?
Markets have little tolerance for uncertainty—and the ongoing escalation in West Asia since February 28 has kept risk appetite firmly in check. Since the onset of the conflict, the Nifty has corrected sharply by over 2000 points, reflecting the sustained pressure from global cues and risk-off sentiment.The price action during this phase has been telling. The index has witnessed three distinct dead cat bounces, each met with aggressive selling at higher levels—clearly underscoring the firm grip of bears on the market. Every pullback has been sold into, highlighting a lack of conviction among buyers. While Nifty managed to end the current week on a flat note, the underlying weakness continues to persist.Volatility remained elevated throughout the week. The index staged a sharp recovery of nearly 900 points in the first three trading sessions, only to see all gains completely erased on Thursday-marking the sharpest single-day decline since June 4, 2024. Ultimately, Nifty ended the week on a muted note, extending its losing streak to four consecutive weeks.Sectorally, the pain has been most visible in Automobile and Banking stocks, which were the key outperformers prior to the conflict. These sectors have borne the brunt of selling pressure, largely driven by sustained FII outflows, with foreign investors offloading a massive ₹81262 crore in the ongoing March series. Given their heavy exposure to these sectors, FII selling has amplified the downside momentum.
A major overhang for the markets has been the sharp surge in crude oil prices. Brent crude once again spiked to $114.3 per barrel during the week before witnessing a marginal cooling off. Simultaneously, concerns around gas shortages and supply disruptions have intensified, with key energy commodities witnessing steep price increases since the start of the conflict. Elevated energy prices continue to pose a risk to inflation dynamics and corporate margins, thereby weighing on equity markets.
From a technical standpoint, the trend remains decisively negative. The index is currently trading below its all the crucial moving averages, and the formation of a bearish candlestick with a long upper shadow indicates persistent selling pressure at higher levels. Adding to the caution, the weekly RSI has slipped to 30.22, marking its lowest level since the COVID-led market correction—signalling deeply oversold conditions, yet without a clear reversal trigger.
Q: What levels will be important for Nifty this week and how should one trade?
For Nifty, the 22,850–22,800 zone will act as immediate support. A sustained breach below this level could accelerate the decline towards 22,500. On the upside, the 23,420–23,460 zone is likely to act as a stiff resistance, with any pullback expected to face selling pressure in this band.
Q: Market’s lackluster performance can be attributed to Nifty Bank, which has delivered its third worst performance in March in the past 20 years, declining by nearly 11%. What do Bank Nifty charts suggest and how to trade?
For the fourth consecutive week, the banking benchmark index Bank Nifty ended on a negative note, underscoring sustained weakness and persistent selling pressure in the banking space. Most notably, on the weekly chart, the index has formed a small-bodied candle with a long upper shadow, which clearly reflects selling pressure emerging at higher levels and a failure to sustain intraday and weekly recoveries.
Furthermore, for the second straight week, Bank Nifty has closed below its 100-week EMA, which is a crucial long-term trend indicator and reinforces the bearish undertone. On the daily timeframe, the index continues to remain under pressure, as it has been trading consistently below its 200-day EMA for the past ten trading sessions. This prolonged stay below the long-term moving average highlights a loss of medium-term trend strength and indicates that rallies are being sold into.
Momentum indicators also remain firmly biased towards the downside. Both the daily and weekly RSI are placed in bearish territory and are sloping downward, suggesting weakening momentum and limited scope for any meaningful upside in the near term.
Going forward, the zone of 54,300–54,400 is expected to act as a key resistance area for the index. As long as Bank Nifty trades below the 54400 mark, the broader outlook is likely to remain negative. In such a scenario, the index may continue its downward trajectory and test the immediate support near 52,200, followed by the next important support around 51500 in the
Q: Auto sector is another top loser and its prospects are tied to oil prices and inflation. In light of the Iran-Israel war, do you expect more correction, or is a bottom visible?
Nifty Auto staged a strong rebound in line with the broader market, bouncing from the 24,230–23,850 zone, a region that had previously acted as strong resistance during June–August 2025. However, the pullback proved short-lived as the index encountered stiff resistance near the 25,700–25,750 zone and eventually closed lower.
Notably, after facing rejection around the 28,720–28,820 zone between February 11–26, 2026, the index has corrected nearly 14%, confirming a double-top neckline breakdown in the process.
Technically, the index continues to trade below its key short and long-term moving averages, indicating a weak underlying trend. Momentum indicators also remain bearish. The RSI has failed to sustain above the 40 mark despite multiple attempts, while the MACD remains below both the zero line and the signal line. Additionally, a rising ADX suggests strengthening bearish momentum.
Going ahead, the 25,200–25,300 zone is likely to act as a crucial resistance. As long as the index remains below this level, the broader trend is expected to stay negative. On the downside, the 24,200–24,100 zone serves as a key support, and a decisive breach below this range could trigger further downside in the index
Q: Fed has left policy rates unchanged and has indicated a single rate cut of 25 bps this year. This comes as a blow to the tech sector which is already reeling under the AI threat. What is your take on the sector and any preferred stock to buy?
Since peaking at 40,301 on 3rd February, the Nifty IT Index has corrected sharply by nearly 28%, reflecting a combination of global macro headwinds and a deeper structural concern around AI disruption.
While a stronger dollar typically acts as a tailwind for IT companies due to higher export realizations, this time the benefit has been overshadowed. The core issue lies in the growing perception that AI poses a fundamental threat to traditional IT services, especially in areas like low-end coding, maintenance, and repetitive back-office functions. Markets have been quick to price in this risk, leading to sustained selling pressure.
That said, it’s important to note that leading IT companies are not standing still. Firms like Tata Consultancy Services, Infosys, and HCLTech have been actively investing in AI capabilities, building proprietary platforms, and integrating AI-led solutions into their service offerings. However, this transition is gradual in nature, the benefits are unlikely to reflect immediately in earnings and may take a few quarters to materialize meaningfully.
From a technical standpoint, the setup remains weak. The index continues to trade below its key short- and long-term moving averages, indicating a sustained downtrend. The MACD line remains well below both the signal line and the zero line, reinforcing bearish momentum. Although the pace of decline has moderated recently, there are still no clear signs of base formation or trend reversal.
Given this backdrop, it would be prudent to avoid bottom fishing at this stage. A more sensible approach would be to wait for signs of stabilization, such as sustained price strength, improving momentum indicators, or evidence of earnings resilience driven by AI adoption, before considering fresh exposure to the sector.
Q: India VIX is up 68% in a month and volatility is expected to remain high going ahead. How should one navigate this phase?
With India VIX surging 68% in a month, investors should prioritize capital protection. Focus on disciplined position sizing, avoid aggressive leverage, and stick to high-quality stocks. Use rallies to reduce risk, maintain higher cash levels, and wait for volatility to cool before taking directional bets.
Q: Olectra, JBM Auto and Jai Prakash Power Ventures were big gainers this week, while Chennai IDBI Bank, Bandhan Bank and BPCL have been big losers. What should investors do with them?
Olectra Greentech
The stock has witnessed a strong rebound from the lows of 865. However, it remains in a broader downtrend since October 2025, and it is still premature to classify the current move as a trend reversal. For any meaningful upside traction, the stock needs to sustain above the 980–975 zone.
JBM Auto
The stock rebounded sharply from its key support zone of 490–470 earlier this week. That said, it continues to face resistance near its previous swing high of 615–620. Unless this zone is decisively breached, the current pullback cannot be considered a confirmed trend reversal.
Jaiprakash Power Ventures
The stock has delivered a downward-sloping trendline breakout on the daily chart, supported by a rise in volumes. Momentum indicators are turning constructive. RSI is trending higher, and the DI+ is comfortably above DI- on the ADX, indicating bullish undertones. The stock needs to hold above the 14.5–14 zone to sustain the move. However, being a penny stock, it warrants a cautious approach.
IDBI Bank
The stock witnessed a sharp gap-down of nearly 17% on 16th March and has continued to drift lower since then. RSI remains weak at around 25, highlighting persistent bearish momentum. As long as the stock trades below the 80–82 zone, the broader trend is likely to remain negative.
Bandhan Bank
The stock has corrected nearly 17% from its recent high of 190 recorded on 26th February. It continues to trade below key moving averages, while the MACD remains below both the zero line and signal line, indicating sustained weakness. The trend is likely to stay bearish as long as the price remains below 165–167.
BPCL
The stock Bharat Petroleum Corporation slipped below its 200-day EMA on 9th March and has been under pressure since. It has corrected nearly 26% from its high of 390 on 27th February. A rising ADX points to strengthening bearish momentum. As long as the stock trades below the 307–310 zone, the overall trend is expected to remain weak.(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
