IGI Logo

Below the Quote on Weekly Note 02 Aug 2025 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd

Markets Extend Losses for Fifth Week Amid Surprise U.S. Tariffs and Mixed Earnings

Equity benchmark indices tumbled for the fifth consecutive week as persistent selling pressure, global headwinds, and cautious sentiment continued to dominate the landscape. Both the Nifty and Sensex witnessed volatile swings before closing sharply lower at 24,512.20 and 80,218.52, respectively. This consistent decline reflects deepening investor unease, driven by a combination of weak global cues, geopolitical uncertainties, and concerns over macroeconomic tightening.

Key Market Drivers

The market tone remained stable in the initial sessions, supported by mixed corporate earnings. However, volatility spiked in the latter half of the week following the surprise tariff announcement by the U.S. President targeting Indian exports, which caught market participants off guard and triggered a risk-off sentiment. This development not only reignited fears of a potential trade standoff but also raised concerns over its impact on India’s export-dependent sectors. The announcement came at a time when markets were already grappling with hawkish central bank commentary, sustained foreign fund outflows, and a relatively underwhelming earnings season. Additionally, concerns over uneven monsoon distribution and its implications for rural consumption further weighed on investor sentiment.

Sectoral Snapshot

The sectoral landscape remained largely negative, with broad-based selling seen across key sectors. Realty, Metals, and Pharmaceuticals bore the maximum brunt due to demand concerns and prevailing policy uncertainties. However, the FMCG index managed to buck the trend, gaining nearly 3%, aided by renewed buying interest in frontline names and positive management commentary. Broader markets fared worse, with both midcap and smallcap indices underperforming, indicating persistent weakness in investor risk appetite.

Key Events to Watch

In the upcoming week, markets will closely track developments around the India-U.S. trade deal, as policymakers are expected to respond diplomatically ahead of the next scheduled discussions. At the domestic level, all eyes will be on the Reserve Bank of India’s monetary policy meeting on August 8, where the central bank’s commentary on inflation, liquidity, and growth outlook will be keenly watched. A dovish tilt could offer support to rate-sensitive sectors. 

On the earnings front, results from marquee companies including Bharti Airtel, DLF, Bajaj Auto, Hero MotoCorp, Tata Motors, SBI, and LIC of India will shape sectoral momentum.Other important triggers include the release of the HSBC Services and Composite PMI, updates on monsoon progress, crude oil price movement, and further commentary from the U.S. on trade negotiations — all of which are likely to influence near-term volatility.

Technical Outlook

Technically, the Nifty’s close below the 24,600 mark confirms a bearish bias, with the short-term structure suggesting scope for further downside unless a strong rebound materializes. The index now finds immediate support near the 24,450 zone, and a breach below this level may accelerate the decline toward 24,180, which coincides with the long-term 200-day exponential moving average (DEMA). In the event of a recovery, the 24,800 level would act as the first resistance, followed by a significant hurdle around the 25,000–25,250 zone.

The Bank Nifty is also gradually trending lower despite visible strength in heavyweight constituents like ICICI Bank and HDFC Bank. Going forward, the 54,500–55,100 zone is likely to provide support in case of further declines, while the 56,500 mark, aligned with the 20-day EMA, will act as the first major resistance. Only a decisive move above 57,400 can revive bullish sentiment in the banking space.

Strategy Ahead

Volatility is expected to remain high in the coming week amid key central bank decisions, corporate earnings announcements, and trade-related developments. Investors are advised to maintain a stock-specific approach, focusing on quality companies across sectors that have shown relative strength in the recent downturn.

While a defensive stance may be prudent in the short term, selective accumulation in fundamentally strong stocks on dips can offer favorable long-term opportunities. Sectors vulnerable to global volatility — especially IT and metals — should be approached with caution until greater clarity emerges around U.S. trade policy and macroeconomic trends. Given the prevailing technical weakness and external uncertainties, disciplined risk management and prudent position sizing will be essential for traders.

Above views are of the author and not of the website kindly read disclaimer