The Indian stock market ended its four-week winning streak as key indices fell sharply last week, following a hawkish outlook by the US Federal Reserve on interest rate cuts and aggressive selling by Foreign Institutional Investors (FIIs).
The Nifty 50 index dropped from 24,768 to 23,587, losing 1,181 points, while the BSE Sensex plunged over 4,000 points, slipping from 82,133 to 78,041. The Nifty Bank index also suffered a steep decline, falling from 53,583 to 50,759, registering a weekly loss of 2,824 points.
Breaking Key Supports: Bears Tighten Their Grip
The Nifty 50 broke below its critical 200-day exponential moving average (DEMA) support at 23,800, emboldening bearish sentiment. The index is now approaching its recent swing low of 23,250, raising concerns about whether this support level can hold or if the market will see further declines.
Why Did the Indian Stock Market Crash?
According to market experts, the US Federal Reserve’s hawkish guidance on rate cuts boosted the US dollar and triggered buying in bond and currency markets, pressuring equities worldwide. FIIs continued to sell, and Domestic Institutional Investors (DIIs) refrained from stepping in, waiting for clarity from the Union Budget 2025.
Mahesh M. Ojha, AVP — Research at Hensex Securities, said, “The global cues weakened due to the Fed’s outlook, strengthening the dollar and sparking bond and currency market activity. FIIs intensified their selling, while DIIs chose caution amid macroeconomic concerns and uncertainties following a weak earnings season.”
What’s Next for the Market?
The outlook remains uncertain as Nifty hovers near the critical support zone. Vaishali Parekh, VP — Technical Research at Prabhudas Lilladher, observed, “Nifty’s close below the 200-period MA at 23,800 signals bearish momentum. Key support lies at the 23,250 zone; a breach here could lead to further declines.”
For the Bank Nifty index, Parekh added, “The index faces crucial support at 50,500; a break below could lead to intensified selling pressure, pushing it towards the 49,800 level.”
Is a Trend Reversal in Sight?
Analysts predict continued volatility. Osho Krishnan, Sr. Analyst — Technical & Derivatives at Angel One, commented, “Nifty’s breach of its 200 SMA opens the door for further downside, potentially to 22,800. Resistance zones lie at 23,800 to 24,300, coinciding with key EMA clusters.”
Krishnan advised caution, emphasizing risk management and discouraging complacent bets in this uncertain market phase.
Opportunities for Bottom Fishing
Certain sectors may offer buying opportunities. Aditya Gaggar, Director of Progressive Shares, highlighted the IT sector’s resilience and the pharma sector’s potential breakout patterns, including Dr. Reddy’s falling channel breakout and Lupin’s bullish flag formation.
As markets brace for more turbulence, investors are advised to tread carefully and prioritize long-term strategies over short-term gains.
