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Below the Quote on Weekly Market outlook for the coming week, and technical views from Ajit Mishra, SVP of Research at Religare Broking

Market Summary

Markets ended lower for the seventh consecutive week amid weak domestic and global cues. The tone remained largely sideways during the first three sessions; however, a sharp decline on Thursday pushed the bulls on the back foot, followed by a muted session to end the week. Consequently, the Sensex declined 0.54% to close at 73,895.74, while the Nifty fell 0.88% to settle at 23,140.50. Broader markets also remained under pressure, with both midcap and smallcap indices witnessing weakness.

Key Market Drivers

Crude oil prices and geopolitical developments remained the key drivers of market sentiment during the week. The surge in Brent following renewed tensions in the Middle East raised concerns over India’s import bill, inflation and the rupee, while rising global bond yields added to pressure on emerging-market equities. Fresh pressure on the financial basket following the IRDAI proposal to cap insurance commissions further dented investor sentiment.

Meanwhile, India’s growth outlook received positive revisions from major rating agencies. S&P Global Ratings, Fitch Ratings and the OECD raised their FY27 GDP growth forecasts to 7.0%, 6.9% and 7.1%, respectively, citing economic resilience and strong domestic growth. However, the upgrades failed to trigger any meaningful positive reaction in the equity market.Sectoral Snapshot

Sectoral performance remained mixed, with technology and financials among the key laggards. In contrast, Realty emerged as the strongest-performing segment, followed by defensive pockets such as pharma and FMCG.

Key Events to Watch

Globally, developments around US-Iran diplomacy and crude oil prices will remain critical. Any progress on a framework for reopening the Strait of Hormuz could ease energy prices and provide some relief to India’s import bill and the rupee, while renewed geopolitical tensions could keep volatility elevated.

On the domestic front, industrial production data for August, government budget data, the external debt position and the HSBC Manufacturing PMI reading will be released during the week.

Foreign exchange reserves data for the period will be released on 2 October and will remain in focus amid continued sensitivity around crude oil and currency movements.

Technical Outlook

Nifty

The Nifty extended its corrective phase for the seventh consecutive week and closed at 23,140.50. The 23,000–23,100 zone remains a critical support area. A decisive break below this range could result in further weakness towards the 22,400–22,600 zone. On the upside, 23,600 will act as an immediate hurdle, followed by the 23,900–24,200 zone. In the near term, the bias is likely to remain negative until the Nifty decisively reclaims 23,600.

Bank Nifty

The Bank Nifty declined 1.38% during the week and remained relatively weaker amid the broader risk-off environment and rising global bond yields.

Immediate support is placed around 54,800, followed by 54,400. On the upside, the index is likely to face resistance around 56,500, followed by a major hurdle near 57,000.

Market Breadth

Market breadth weakened during the week, with the midcap index declining by over 2% along with the frontline indices, while the smallcap segment managed to close broadly flat. The broader market, therefore, witnessed increased selling pressure after a period of relative resilience.

The divergence between improving domestic growth indicators and weakening market breadth suggests that external factors remain the dominant near-term influence. Volatility is likely to remain elevated until greater clarity emerges on crude oil prices and geopolitical developments.

Strategy Ahead

Market is likely to remain cautious as crude oil prices, geopolitical developments and global bond yields continue to influence near-term direction. A sustained rise in crude could add to inflationary pressures and weigh on the rupee and corporate margins, while easing energy prices following progress on Iran-US negotiations could provide some relief.

The improving domestic growth outlook remains a positive factor, but external risks warrant a measured approach towards fresh positions.

For traders, positions should largely remain aligned with the benchmark trend. At the same time, select pockets across sectors, particularly pharma and healthcare, may continue to offer opportunities on declines. Traders should remain disciplined with position sizing and clearly define their risk-management levels.

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