Indian stock market: Sensex, Nifty 50 fall 1% for the week; can the correction continue?

Mint

a day ago

Indian stock market benchmarks fell over a per cent last week, dragged by escalating tensions in the Middle East, tariff-related uncertainty and foreign capital outflow.
The Nifty 50 fell 1.14 per cent, while the Sensex suffered a loss of 1.30 per cent for the week ended June 13. The BSE Midcap index declined 0.90 per cent, while the BSE Smallcap slipped 0.13 per cent. The Nifty Bank index fell 1.9 per cent last week.
In the Nifty index, stocks such as Eternal, Adani Ports, Titan Company, Power Grid, Tata Steel, Tata Consumer, Mahindra and Mahindra, Trent, HDFC Bank, Shriram Finance, ICICI Bank and Hindustan Unilever fell 3-5 per cent during the week.
"Markets remained under pressure and declined by over a per cent during the week, weighed down by rising geopolitical tensions and mixed global cues. After starting the week on a subdued note, indices gradually drifted lower amid increased volatility and finally settled near the week's low," Ajit Mishra, SVP of research at Religare Broking, observed.
Heightened geopolitical tensions may keep the market volatile next week. The upcoming US Federal Reserve policy decision, the progress of the monsoon, and macro prints will also influence market sentiment.
"Looking ahead, markets are likely to remain volatile amid ongoing geopolitical uncertainty and crucial central bank meetings. The US Federal Reserve's upcoming policy decision will be closely tracked, as market participants look for clarity on the timing and magnitude of potential rate cuts, especially in light of mixed economic signals. Domestically, the focus will remain on the progress of the monsoon, crude oil price trends, WPI inflation data, and FII activity," said Mishra.
On the technical front, the Nifty 50 has fallen below 25,000, exhibiting weakness on the technical charts.
According to Amol Athawale, VP of technical research at Kotak Securities, on weekly charts, Nifty formed a long bearish candle and is currently trading below the 20-day SMA (simple moving average), which is largely negative.
Athawale believes that as long as the market remains below the 20-day SMA or 24,850, weak sentiment will likely continue.
"On the downside, the market could retest the level of 24,500, a breach of which could accelerate selling pressure, potentially dragging the index to the 50-day SMA around 24,300. On the upside, a break above 24,750 could extend the pullback move up to 24,850, even further pushing the index toward 24,950–25,000," said Athawale.
For Bank Nifty, Athawale sees a key support zone between 55,000 and 55,200.
Above this range, Bank Nifty could bounce back toward 56,100–56,300. Conversely, a fall below 55,000 increases the likelihood of testing the 50-day SMA or 54,500, said Athawale.
Mishra pointed out that the Nifty 50 has re-entered its consolidation range, and a decisive move beyond the 24,400–25,200 zone will be required to establish the next directional trend.
Mishra said that in case of a breakdown, the 24,000 level is expected to act as crucial support, whereas a breakout above 25,200 could trigger a sustained rally toward the 25,600 mark.
Nifty Bank has failed to hold its breakout above the 56,000 mark and is now expected to find support in the 54,000–54,600 range. A decisive move above 56,500 will be essential to revive momentum in the financial space, Mishra said.
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