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Below the Quote on Weekly Note Sep 27 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd.

Markets Reel Under Tariff Jitters; Data-Heavy Week Ahead

Market Summary

Equity markets faced heavy selling pressure during the past week, with benchmark indices tumbling over 2.5% and ending their three-week winning streak. The tone remained negative from the start, and selling intensified in the final session. Consequently, both Nifty and Sensex settled near their weekly lows at 24,654.70 and 80,426.46, respectively.

Key Market Drivers

Global trade tensions dominated sentiment, with concerns over new H-1B visa rules threatening IT services exports. Muted guidance from Accenture further weighed on the IT pack, while news of fresh tariffs on branded drugs pushed bulls completely on the back foot toward the week’s end. Adding to the pressure, FIIs were net sellers, pulling out more than Rs 5,500 crore from equities.

Sectoral Snapshot

Selling was broad-based, with all major sectors ending in the red. IT stocks bore the brunt, slipping nearly 8% during the week, followed by sharp losses in realty, consumer durables, and healthcare. Banking was relatively resilient but still ended lower. Midcaps and smallcaps witnessed steeper cuts as traders reduced exposure to riskier bets amid global uncertainty.

Technical Outlook

Nifty (24,654.70): Weakness in heavyweights has accelerated the decline, with the index now approaching key support near the 200 DEMA at 24,400, followed by 24,000–24,200. On any rebound, the previous support at 25,000 (20 DEMA) will act as a strong resistance.

Bank Nifty (54,389.35): The index slipped nearly 2% and ended close to the crucial 54,900 support. Continued pressure in private banking majors, ICICI Bank and HDFC Bank, could extend the decline, with next major support at 53,800 (200 DEMA). A decisive close above 55,000 is needed to reverse the bias.

Broader Indices: Midcap and smallcap indices continue to underperform and may weaken further, though oversold conditions could trigger intermittent rebounds. Aggressive positions should be avoided.

Strategy Ahead

Markets step into a data-heavy week, where both domestic and global cues will dictate momentum. On the domestic front, industrial production data and the RBI’s policy decision will be in focus, along with the expiry of September derivatives contracts, which could add to volatility. Globally, updates on the US-India trade deal will be closely tracked. With volatility likely to remain elevated, traders should stay cautious, balance cyclical exposure with defensives, and prioritize risk management. Sustained FII selling and sector-specific headwinds may keep the broader trend fragile in the near term.

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