With just one more session to go in March, Nifty so far has plunged over 9% this month
Fear index India VIX settled at 26.80 on the NSE in the last session, up by 8.77%.
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: The Israel-Iran war flipped the overall script in March which is seasonally a strong month as Nifty is down nearly 9%. Based on the F&O rollover data, what is your expectation for April?
Since the onset of the US–Iran war–led sell-off, one recurring pattern has consistently emerged in the markets. Short-lived pullbacks lasting 2–3 trading sessions have repeatedly been followed by sharp gap-down openings. Each of these brief rebounds has lured traders into a false sense of recovery, triggering FOMO-driven participation under the assumption that the worst is over. However, these pullbacks have consistently failed to sustain, and the optimism has quickly given way to fresh rounds of aggressive selling, often materializing as large gap-downs over the subsequent 2–3 trading sessions, making one question whether the next bounce is an opportunity or just another trap waiting to unfold.This repetitive cycle of hope followed by sudden downside shocks is not only increasing volatility but is also leading to significant wealth erosion, particularly for short-term traders and leveraged positions. The inability of the market to build on pullbacks highlights the fragile sentiment and reinforces the need for caution, discipline, and risk management in the current environment because when conviction is missing, even small triggers can lead to disproportionately large reactions.Month-to-date, the benchmark index Nifty has declined by over 9%, marking its steepest monthly fall since the Covid 19–induced market collapse. At the same time, disruptions in global gas supply are creating a diverse set of challenges across multiple industries, particularly those dependent on energy-intensive operations. These supply constraints have led to rising cost pressures, uncertainty around margins, and delayed investment decisions. Collectively, these factors are dampening hopes of an earnings revival and eroding overall market confidence, further weighing on investor sentiment and risk appetite—raising a deeper concern about whether the worst of the earnings downgrades is still ahead.
From a technical perspective, there has been no change since last week. The index continues to trade below its key moving averages, while momentum indicators remain firmly in bearish territory, indicating that downside pressure persists. Interestingly, the Nifty Midcap 100 and Nifty Smallcap 100 indices are displaying relative outperformance compared to the frontline indices.
However, given the prevailing volatility and fragile sentiment, price action in the mid and small cap space needs to be closely monitored over the next 2–3 weeks to assess the sustainability of this relative strength because history suggests that leadership often shifts just when confidence starts to build.
Talking about crucial levels, the 22,650–22,600 zone is expected to act as an important support area for Nifty. A sustained break below 22600 could open the door for further downside, potentially dragging the index towards 22,400, followed by 22,200 in the short term. On the upside, the 23150–23200 region is likely to remain a critical resistance zone.
Q: Banks have been bleeding primarily because of FII outflows. Can you spot trading opportunities in Bank Nifty (or bank stocks) or at least suggest traders ways to cut their losses if more selling continues?
The banking benchmark index Bank Nifty has significantly underperformed the frontline indices during March. Month to date, the index is down by over 13% and has formed a sizeable bearish candle, highlighting strong selling pressure at higher levels. The ratio chart of the index as compared to Nifty is marking the sequence of lower tops and lower bottoms.
The weakness is further evident from the fact that the index is currently trading nearly 8% below its 200-day EMA and around 9% below its 100-day EMA, underscoring the loss of medium- to long-term trend support. From a momentum standpoint, the daily RSI has entered a super bearish zone as per RSI range shift rules, while the weekly RSI remains in bearish territory and continues to decline, indicating sustained downside momentum across timeframes.
Given the current price structure and negative momentum setup, the index is likely to extend its southward trajectory in the short term. In terms of key levels, the 51,700–51,800 zone is expected to act as an immediate support area. A sustained breakdown below 51,800 could result in further correction towards 51000, followed by 50,400 in the near term.
On the upside, any recovery attempt is likely to face strong resistance in the 53400–53500 zone, which will act as a major hurdle and supply area for the index.
Q: There is a bloodbath across situation and with Iran-Israel war uncertainty, it is very difficult to take an informed call. In such a situation, are you seeing themes/pockets of opportunities for investors?
The Nifty CPSE index is displaying relative outperformance compared to the broader and frontline indices. While the index has not shown strong bullish momentum, it is currently moving in a consolidation phase, even as the broader market undergoes a corrective decline. This relative resilience suggests better stability and selective accumulation, positioning Nifty CPSE as a comparatively stronger pocket amid an otherwise weak market environment.
Q: Unlike 2025, investors had a refuge in gold and silver and were putting money there. That situation has changed dramatically as we see bullion prices falling sharply. What will be your advice to investors whether to remain invested or preserve cash?
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?
Yes, the market’s lackluster performance has largely been driven by Bank Nifty, which has corrected by nearly 13%. This sharp underperformance has exerted significant pressure on the broader indices and weakened overall market sentiment.
Chart patterns of Bank Nifty continue to reflect a weak and bearish structure, indicating limited scope for a sustainable recovery in the near term. Given the prevailing trend and momentum setup, we recommend adopting a “sell on rise” strategy, as any short-term pullbacks are likely to remain corrective and may attract fresh selling pressure.
Q: For risk-takers, volatility brings opportunities for making money. Will you prefer cash markets or F&O?
Volatility is a double-edged sword. It creates opportunity, but also amplifies risk. For a risk-taker, the goal isn’t just to chase swings, but to manage them effectively. In volatile markets, moves are sharp and fast. If you’re right, profits can come quickly; if you’re wrong, losses can escalate just as rapidly. This is where the choice between cash and F&O becomes crucial.
F&O is a leveraged product, so volatility acts as a multiplier. If a trade goes against you, it becomes a double whammy. Price movement and leverage work against your capital. Even the right view can go wrong due to timing or sudden reversals. In contrast, cash markets offer better control. With proper position sizing and risk management, you can use volatility to your advantage without the pressure of leverage.
In such phases, it’s wiser to focus on survival first, because volatility rewards discipline, but punishes over-leverage.
Q: HEG, Emcure and Triveni Engineering were among top gainers this week, while Firstcry, IDBI Bank and Lodha have been big losers. What should investors do with them?
HEG had briefly slipped below its previous swing low of 491 on the daily chart but quickly reclaimed those levels, followed by an impressive rebound supported by a sharp rise in volumes. The DI+ crossing above DI- on the ADX indicator suggests that buyers are gaining control over sellers. As long as the stock holds above the 520–515 zone, the pullback is likely to extend further.
Emcure has witnessed a horizontal trendline breakout on the daily chart. The RSI is trending higher and sustaining above 60, indicating strong bullish momentum. Additionally, the DI+ crossover reinforces the dominance of buyers. The uptrend is likely to continue as long as the stock trades above 1580.
Triveni Engineering has staged a strong rebound from its key support zone of 335–325. The MACD has crossed above the signal line, indicating improving momentum. However, the stock faces stiff resistance around 418–420. A decisive breakout above this zone could lead to an extension of the pullback.
FirstCry has been consolidating in the 252–207 range since 19th February. The RSI failed to cross the 60 mark and has drifted lower, suggesting weakening momentum. The MACD remains below both the signal and zero line, indicating a bearish bias. The stock is likely to remain under pressure as long as it trades below 250.
Both IDBI Bank and Lodha are trading significantly below their key short- and long-term moving averages. A rising ADX indicates a strengthening bearish trend, while the RSI hovering around 20 reflects strong downside momentum. 72 for IDBI Bank and 760 for Lodha act as immediate resistance levels, and as long as the stocks trade below these levels, the trend is likely to remain bearish.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
