Weekly Note by Mr. Ajit Mishra, SVP - Research, Religare Broking Ltd
Below the Quote on Weekly Note by Mr. Ajit Mishra, SVP - Research, Religare Broking Ltd
Markets End Lower Amid Weak Start to Q1 Earnings and Mixed Global Cues
Markets extended their losing streak into the third consecutive week, as investors adopted a cautious stance due to the disappointing start of the earnings season and ongoing uncertainty surrounding the US-India trade deal. Similar to the previous week’s trend, the benchmark indices showed some resilience during the initial three sessions, but the bias turned negative again in the latter half. Eventually, both the Nifty and Sensex settled near their weekly lows at 24,968.40 and 81,757.73, respectively.
Key Market Drivers
While easing CPI and WPI inflation provided temporary relief and reinforced expectations that the Reserve Bank of India would maintain its accommodative stance in the near term, macroeconomic concerns resurfaced. These were driven by a marginal decline in net direct tax collections and flat export performance in June. The first-quarter earnings season also failed to inspire confidence, with investors awaiting major corporate results for clearer direction.
Sectoral Snapshot
Amid the corrective tone in the benchmarks, sectoral indices witnessed a mixed trend, with realty, auto, and pharma emerging as top gainers, while IT, financials, and banking sectors ended in the red. Interestingly, the broader markets displayed resilience, with midcap and smallcap indices registering healthy gains despite weakness in frontline stocks.
Key Events to Watch
All eyes will remain on the ongoing earnings season, with a series of major results lined up. Investors will first react to the results of three heavyweights—Reliance, HDFC Bank, and ICICI Bank—during early trades on Monday. In the sessions that follow, several prominent companies including Infosys, Dr. Reddy’s Laboratories, Bajaj Finance, Nestle India, and Cipla are scheduled to announce their quarterly results.
On the macroeconomic front, key data points such as India’s Infrastructure Output and HSBC Flash PMI numbers for Manufacturing, Services, and Composite will be keenly tracked.
Globally, market participants will monitor trade deal updates, which could influence FII flows and currency movements. At the same time, uncertainty persists as global markets recalibrate expectations for Federal Reserve rate cuts, amid sticky inflation and trade-related tensions.
Technical Outlook
Nifty ended the week below the key psychological mark of 25,000, indicating sustained caution. The index remains vulnerable to further downside if it breaks below the immediate support zone of 24,900. A breakdown could drag the index toward the 24,450–24,700 zone in the coming sessions.
On the upside, the 20-day EMA—currently acting as a short-term hurdle—may restrict recovery around the 25,250 mark. A decisive move above this level is essential for any bullish reversal. Until then, the broader trend is expected to remain under pressure.
The banking index also came under pressure and slipped below its 20-day EMA support zone. Going forward, 55,500 will act as a crucial support area; a breach below this could intensify selling pressure. In case of a rebound, the index may face initial resistance around 56,800, with major supply zones near 57,400–58,200.
Strategy Ahead
We expect the index to remain in a consolidation phase with a negative bias in the near term, driven by a weak start to the earnings season and prevailing global uncertainties. Traders are advised to stay selective and focus on stocks showing strong earnings performance and relative strength.
Among key sectors, metal, pharma, and realty appear relatively stronger, while auto and energy may consolidate and present selective opportunities.
While broader indices continue to display relative strength, a cautious approach is recommended when initiating fresh trades, especially with several key earnings reports and macroeconomic triggers scheduled for the upcoming week.
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