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Below the Quote on Weekly Market Analysis by Mr. Ajit Mishra - SVP, Research, Religare Broking Ltd

Markets gradually declined by ~ 2% during the past week, primarily influenced by weak domestic signals. The negative sentiment prevailed from the outset, exacerbated by a continuous rise in the India VIX, indicating heightened volatility. Additionally, the sell-off in certain major stocks in response to their earnings contributed to the downward pressure as the week unfolded. Ultimately, both the Nifty and Sensex, the key benchmark indices, closed near their lowest points for the week at 22,055.20 and 72,664.47 respectively. Major sectors such as financials, energy, and metals recorded significant losses, while FMCG, automotive, and IT sectors demonstrated resilience, mitigating the overall impact. Broader indices also experienced declines ranging from 2.7% to 5%.

Despite the negative local sentiment, the strength observed in global markets, particularly in the US, has been instrumental in curbing the pace of decline. It's essential for investors to closely monitor both global market performance and local factors for market cues.

The outlook suggests a continuation of the negative tone in the Nifty, following its breakout from the rising channel on the daily chart. Attention is now focused on the 21,800 level as a crucial reference point for the index, with a potential break signaling a move towards the 21,200-21,400 range. Conversely, a rebound would encounter significant resistance around the 22,350-22,500 zone. Given the pressure across most sectors, traders are advised to adjust their positions accordingly, restricting long positions to sectors such as FMCG and automotive that exhibit strength amidst the downturn.

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