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

Markets Wrap Up a Volatile Week with Mild Losses; Tariff Developments and Earnings Will Remain in Focus

Equity benchmarks closed the week on a subdued note, ending with modest losses amid heightened volatility. The holiday-shortened week began on a weak footing, with a sharp gap-down triggered by global concerns. However, sentiment improved significantly in the subsequent sessions, helping the Nifty and Sensex trim losses and settle at 22,828.50 and 75,157.26 respectively, down nearly 0.5%.

Key Market Drivers

The initial sell-off was sparked by the U.S. announcement of reciprocal tariffs, which sent shockwaves through global markets. The situation worsened with China’s retaliatory measures. However, a sense of relief returned after the U.S. deferred the implementation of tariffs for all nations except China, triggering a sharp rebound globally, including in Indian markets.

On the domestic front, the Reserve Bank of India’s rate cut and dovish policy stance provided further support. Additionally, a significant drop in the U.S. Dollar Index and crude oil prices boosted market sentiment.

Sectoral Snapshot

Sectorally, realty, metal, and IT stocks were the major laggards during the week. In contrast, select stocks from the FMCG and energy spaces managed to buck the trend and ended in the green. The broader indices also mirrored the benchmark’s performance, closing flat to marginally lower amid intense intra-week swings.

Key Events to Watch

The upcoming holiday-shortened week will remain sensitive to further developments on the U.S.-China tariff front. On the domestic side, the spotlight will also be on corporate earnings, with heavyweights such as Wipro and Infosys from the IT sector, along with private banking majors HDFC Bank and ICICI Bank, scheduled to announce their quarterly results.

Technical Outlook

Technically, the Nifty witnessed a smart rebound after breaching its March lows and is now testing its 20-day exponential moving average (DEMA) around the 22,900 mark. A sustained close above this level could open the door for a further rally towards 23,400, where the 100 and 200 DEMA converge. A major hurdle remains at 23,800. On the downside, immediate support lies at 22,300; a break below this could lead to a retest of the recent swing low near 21,700.

Bank Nifty continues to show relative strength, reclaiming key moving averages after a brief dip. Sustaining above the 50,000 level would keep the bullish momentum intact, with potential upside targets at 52,000 and eventually 53,500.

Strategy Ahead

Given the prevailing uncertainty and sharp swings, traders and investors are advised to adopt a hedged approach until we see further cool-off in the volatility index, India VIX. Meanwhile, selective stock-picking opportunities continue to emerge, particularly in the banking and financial space. Investors may also consider quality names from other sectors on dips.

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