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

The markets faced significant pressure this week, losing nearly 5% and wiping out the gains of the past four weeks. After a subdued start, benchmark indices, the Nifty and Sensex, continued to decline daily, closing near the week’s lows at 23,857.5 and 78,041.59, respectively. Persistent selling by FIIs, coupled with the hawkish tone of the US Federal Reserve, disrupted the recovery phase. Reflecting the broader sentiment, all key sectors except pharma ended lower, with metals, energy, and banking taking the hardest hits. The broader indices also succumbed to pressure in the final sessions, shedding over 3.5% each.

Looking ahead, the coming week is shortened due to holidays, and participants will closely monitor FII flow trends and global market performance for direction. Additionally, the scheduled expiry of December’s derivative contracts may amplify volatility.

The sharp sell-off in heavyweight sectors like banking and IT, which had previously supported the market, has shifted the bias back to bearish. Weakness in the rupee, along with a relatively stronger US market performance driving outflows, is compounding the current challenges.

From a technical perspective, the Nifty has breached a critical long-term moving average support and is now nearing the November low of 23,263.15. A breach of this level could intensify the downward trend, potentially pushing the index to 22,700. In case of a rebound, the 24,000–24,400 zone would act as a strong resistance.

Among sectoral indices, pharma and healthcare appear resilient, while IT is approaching a critical support zone. Energy has entered an extremely oversold territory, which could trigger a short-term bounce. In the banking index, significant support lies at the long-term moving average around 50,400 and further at the November low of 49,787.10. Conversely, auto, PSE, and metal sectors may continue to underperform in the near term. Traders are advised to adjust their positions accordingly, keeping a strong emphasis on risk management.

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