Nifty snapped three-weeks winning streak as worries related to product specific tariff resurfaced - ICICI Direct
Nifty :24655
Technical Outlook
Day that was…
Nifty snapped three-weeks winning streak as worries related to product specific tariff resurfaced. In addition to that, weakness in Rupee as well as FII's constant sell off weighed the sentiment. Nifty declined 2.7% to settle the week at 24655. Broader market bore the brunt of benchmark's sell-off, as Nifty midcap, smallcap dropped ~5%, each. All major sectors ended in red dragged by IT, Pharma, Realty.
Technical Outlook:
* Nifty started the week with a gap down, and failed to sustain at higher levels and the breach of last week’s low of 25050 intensified selling pressure that dragged Nifty below 24700 mark. As a result, the weekly price action formed bear candle carrying lower high-low indicating, pause in upward momentum after three weeks of upmove.
* Nifty is likely to open Gap-up tracking positive global cues. We believe, the last weeks profit booking is more of retracement of past three weeks >1000 points up move. In the upcoming truncated week, we expect Nifty to consolidate amid stock specific action wherein strong support is placed in the range of 24400-24200 zone. Meanwhile, on the upside immediate resistance is placed at 25300.
* Key point to highlight is that, since April 2025 lows of 21743 Nifty has rallied 18% within which there have been seven instances wherein intermediate corrections arrested within 3-5% range. In current scenario as well, we expect Nifty to maintain the same rhythm by arresting intermediate correction within 5%, value for the same is placed at 24200.
* On the structural front, we believe, current consolidation phase presents opportunities to accumulate quality stocks backed by strong earnings, particularly those positioned to benefit from next-generation GST reforms and upcoming festive season.
* The key support threshold of 24400-24200 zone is based on following observations:
* a) Over past four months key point to highlight is that, index has managed to defend the key support threshold of 24400 mark while absorbing host of negative news like geopolitical issues, India-Pakistan conflict, tariff concerns, quarterly earnings.
* b) The level of 24400 is aligning with the 200-day EMA and the previous gap support zone of 24,378–24,164, which indicates a high probability of demand emergence at lower levels and continuation of the primary up trend.
* In the current corrective phase, BFSI, Auto and Metal sectors have been showing resilience while short term structure of IT, Realty and Pharma have shown weakness, indicating prolonged underperformance going ahead. Hence, focus should be on domestic centric themes.
* Key Monitorable:
* a) Development on tariff negotiations.
* b) RBI Policy.
* c) Monthly Auto sales data post GST reforms implementation.
Nifty Bank : 54389
Technical Outlook
Day that was:
Bank Nifty halted three-weeks of winning streak closed on a negative note to settle at 54,389 down 1.93%. The Nifty Private Bank index has mirrored the benchmark, ending the week at 26,488 down 1.79%..
Technical Outlook:
* Bank Nifty opened the week on a negative note and breached the previous week's low. As a result, the weekly price action formed a bearish candle carrying lower-high-low formation, highlights emerging profit booking for the index in the near term.
* Key point to highlight is that the Index is undergoing a healthy retracement phase after three consecutive weeks of gains. Thus far, intraday rebounds have remained short-lived, keeping the market in a corrective mode. Meanwhile, the daily stochastic oscillator has slipped into the oversold zone with a reading of 9, indicating that the downside may be limited and that a technical rebound could emerge in the near term. For this to materialize, a decisive close above the previous session’s high would allow the Index to surpass the recent swing high at 55,835 and pave the way towards 56,800, being 80% retracement of the preceding decline (57,628-53,578). Following favorable GST reforms, focus now shifts to tariff negotiations, where any constructive outcome could act as a potential catalyst. Therefore, any dip from current levels should be seen as a buying opportunity, with immediate support placed near 54,500, representing the 61.8% retracement of the ongoing up move (53,561-55,835).
* Structurally, over the last eight weeks, the index has retraced only 38.2% of its preceding 16-week, 21% rally. This slower pace of retracement followed by a subsequent rebound which was the strongest of the last three recovery attempts reinforces the view of an underlying uptrend resumption.
* The PSU Bank Index settled the week on a negative footing, mirroring the benchmark. The pullback is assessed as a constructive consolidation within the prevailing uptrend, rather than a reversal, as price action continues to sustain well above all key moving averages, reaffirming inherent strength. A sustained close above the recent swing high of 7,567 would confirm cup & handle pattern breakout continuation and unlock further upside potential towards the measured move target of 7,700. On the downside, initial support is placed at 7,150, which aligns with the 50% retracement of the latest upswing (6,730–7,567) coincides with the 20-day EMA
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