Equity benchmarks subdued amid rising tensions - ICICI Direct
Nifty :24865
Equity benchmark started the truncated week on a subdued note tracking escalated geopolitical tension. Nifty settled Monday’s session at 24850, down 320 points. Broader market bore the brunt of sell-off wherein Nifty midcap, smallcap lost 1.6% and 1.8%, respectively. Sectorally, barring Metal, all major indices ended in green dragged down by Auto, Oil & Gas, Consumer Durables. Meanwhile, India Vix (which gauge the market sentiment) jumped 24% to 17, indicating rise in volatility
Technical Outlook:
* The index commenced the week with a gap down opening. However, fag end buying helped index to recover some of the losses and settled the session around 24900 zone. As a result, daily price action formed a bull candle carrying gap above it, indicating supportive efforts from Feb-26 low of ~24600.
* On the back of weak global cues, index is likely to open with a gap-down and expect volatility to remain elevated on the backdrop of escalated geopolitical tension. On downside 24,300 is a key support being previous swing low made in August 2025 as well as placement of 20-month EMA. A decisive close below 24,300 would result into extension of corrective bias towards 23,900, being 50% retracement of 2025-2025 rally (21,743- 26,373). Meanwhile, for a meaningful pullback to materialise, index need to fill Monday’s Gap area (25178-24989) and decisively close above 25200 mark.
* In the last four decades there have been six major geopolitical escalations. On each occasion it formed major bottom once anxiety around the event settled down. Investing in such panic reactions with long term mind set has been rewarding as index has double digit returns in subsequent three months. In the current scenario, post the kneejerk reaction, we believe market would stabilise. Hence, we advise dips should be capitalised to build quality portfolios from medium to long term perspective
* On the larger degree time frame, index has been respecting 20 months EMA which has been held post Covid-lows. The current reading is placed around 24300 that corroborates with August swing low of 24338, highlighting strong support going ahead.
* In tandem with the benchmark move, Nifty midcap, smallcap indices once again retested their key support zone. We expect, index to undergo base formation while sailing through global volatility and set the stage for next leg of up move head.
Key Monitorable:
* Brent crude would be the key monitorable going forward amidst renewed geopolitical tension, that pulled it around falling resistance trendline placed at $82 range. A decisive close above $82 would fuel the momentum for next leg of up move that can add pressure on emerging markets like India
Nifty Bank :59840
Nifty Bank ended the day on negative note to settle at 59840 down 1.14%. Nifty PSU Bank also closed down in line with benchmark losing 1.8%
Technical Outlook:
* Index began the week with gap-down opening and thereafter formed lower high lower low. However, last hour buying helped Index to recover some lost ground. Consequently, daily price action formed a bull candle, with gap-area above its high (60177-60438)indicating buying demand from lower levels.
* Index is likely to witness a Gap-down opening on the back of weak global cues tracking escalated geopolitical tension. Going ahead sustainability below 59300 support will lead to extended correction towards 57800 being February lows coinciding with 50% retracement of Sep25-Feb26 upmove(53562-61764).
* However, one should note that the Nifty Bank index continues to show resilience compared to the benchmark. As the banking index is just 3% away from its All-Time high while Nifty is ~6% away from its record highs, indicating relative outperformance. We believe, volatility is likely to remain elevated on the backdrop of geopolitical uncertainty. Therefore, any corrective declines from current levels should be viewed as buying opportunities as strong demand zone is identified near 57,800, being 50% retracement of the rally recorded from Aug 2025 to Feb 2026 (53,606-61,674).
* Structurally, index has spent three weeks while retracing merely 38.2% retracement of early Feb rally. Such a slower pace of retracement signifies healthy consolidation that would help index to form a higher base and set the stage for next leg of up move towards All Time high of 61800
* The PSU Bank index witnessed profit booking in line with benchmark. Going ahead we expect Index to consolidate in range 9450-9900 levels, that would set the stage for next leg of rally in coming weeks
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