Broad-Based Selloff Drags Nifty, Smallcaps Face Profit Booking - ICICI Direct
Nifty :23644
Technical Outlook
Week that was.. Persisting macroeconomic pressures continued to weigh heavily on market sentiment. Nifty lost 2.2% for the week to settle at 23644. Smallcap index seen profit booking after recent spectacular up move, down 4.5%. Sectorally, barring pharma & metal all major indices ended in red wherein realty, IT, auto remained the biggest loser. Technical Outlook:
* Index failed to sustain intra-week recovery attempt. As a result, weekly price action price action formed a bear candle with a lower shadow, that reinforces corrective bias.
* Index is likely to witness gap-down opening on back of renewed geopolitical tension and rise in Brent crude prices. In the upcoming volatile week, Geopolitical uncertainties, surging crude oil prices, rising US 10-year bond yields, and a weakening Rupee will likely drive near-term volatility. Hence, it is important to keep stock centric approach while sailing through earing season.
* Technically, the lack of sustainability above 50 days EMA has kept market in a prolonged consolidation phase over past four weeks. However, it is important to highlight that, amidst this rangebound activity Nifty has retraced merely 50% of preceding three weeks 11% rally.
* The slower pace of retracement signifies healthy consolidation that has helped index to cool off the overbought conditions that would eventually pave the way to challenge the upper band of consolidation place at 24400.
* For a meaningful pullback to materialize, index need to decisively sustain above the psychological mark of 24000 as it is confluence of 50 days EMA coincided with 61.8% retracement and last week’s high.
* Hence, one should focus on accumulating quality stocks backed by strong Q4 earnings as key support is placed at 23100 being 61.80% retracement of previous move (22182-24601) and the price gap support from 7th April 2026.
* The Nifty Midcap index witnessed profit booking after touching fresh all-time highs while Nifty small cap snapped its six weeks winning streak wherein it rallied 25%. Both indices have seen mean reversion towards its 20 days EMA. In the process, market breadth has seen a minor deterioration over fortnight, as currently 70% of stocks within Nifty 500 universe are trading above their 50 days SMA compared to past 2 weeks reading of 72%. Meanwhile, reading of % of stocks trading above 200 days SMA remained steady at 42%, highlighting broadening of rally that eventually bodes well for durability of ongoing up move
Intraday Rational:
* Trend – Formation of lower high-low signifies corrective phase
* Levels - Sell around 61.8% retracement of Fridays range
Nifty Bank : 53710
Technical Outlook
Week that was:
The Bank Nifty Index breached previous week low and closed negative for the week at 53710 down 2.7%. Nifty PSU Bank relatively underperformed , losing 4.15%.
Technical Outlook:
* corrective bias.
* Index witnessed slower pace of retracement wherein Index over four weeks has retraced merely 61.8% of earlier 3 weeks rally, we believe Index to form higher base above 52800 levels. However, to pause the ongoing corrective move, a decisive close and sustainability above 20 days EMA that coincided with last week’s high of 55000 is a prerequisite which would gradually pave the way to head towards 56300 levels, being last week high coinciding with 80% retracement of current decline (57450-53191).
* Strong support is placed around 52800 being gap-area formed on 7th April and 61.8% retracement of entire April rally (49954-57456).
* Nifty PSU Bank is taking support at its 52-week EMA after four weeks of correction which has been held Since May 2025 acting as strong support. Thereby, sustainability above 52 weeks EMA on a weekly closing basis is important to watch out for as that would help into to stage a recovery going ahead
* Intraday Rational:
* Trend- Formation of lower high-low indicates corrective bias
* Levels- Sell around 61.8% retracement of Fridays range
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