The Indian stock market benchmark indices, Sensex and Nifty 50, extended their losing streak for the fifth consecutive week, the longest in 14 months, amid intense selling pressure due to the heightened geopolitical uncertainty.
The Sensex slumped 2.27% to close at 74,781.76, and the Nifty 50 declined 2.09% to end at 23,398.10 last week, slipping below key moving averages, as the risk-off sentiment gripped investors.
Elevated crude oil prices, surging global bond yields and concerns over US inflation weighed on investor sentiment.
Going ahead, market participants will focus on the trends in crude oil prices, the trajectory of the global bond yields, and the upcoming US Federal Reserve policy meeting scheduled on September 15-16.
“A US Fed rate hike accompanied by hawkish economic projections could strengthen the dollar, tighten global financial conditions and place further pressure on emerging-market equities, foreign flows and the rupee,” said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth.
Conversely, an unchanged policy rate — or a hike accompanied by balanced forward guidance — could trigger a relief rally if investors interpret the outcome as less restrictive than feared.
On the technical front, Nifty 50 has slipped below its crucial short and long-term moving averages, while momentum indicators and oscillators are also portraying a weak picture, reinforcing the bearish undertone.
Here are key technical levels and outlook for Sensex, Nifty 50 and Bank Nifty for this week:
Sensex Prediction
Sensex recovered strongly after testing the 74,160-zone last week and broke the 74,500 mark during the session, improving the short-term structure.
Sachin Gupta, VP – Technical Research at Choice Equity Broking, noted that the momentum indicators remain weak, with RSI at 29.44 versus its RSI-based moving average of 39.43, placing the indicator in oversold territory. PCR at 0.94 suggests a relatively balanced derivatives setup.
“Overall, the technical structure has improved following the sharp recovery, although a sustained move above 75,000 – 75,200 would be required for a stronger bullish confirmation,” said Gupta.
Looking ahead, he added that the broader outlook for the Sensex remains sideways, with the index likely to consolidate within the 74,000 – 75,200 range in the near term.
“Holding the 74,000–74,160 support zone could keep the recovery attempt intact and allow the index to retest 75,000 – 75,200. A decisive breakout above the resistance zone would strengthen the outlook and open the door for further upside, while a break below 74,000 could bring renewed selling pressure,” said Gupta.
For now, the market remains cautious but shows signs of resilience after the sharp recovery from lower levels, he added.
Nifty 50 Outlook
The moving average setup for Nifty 50 has turned bearish, with the 20-day moving average crossing below both the 50-day and 100-day moving averages. However, the index is expected to see some mean reversion from the oversold zone, although the broader structure remains weak.
According to Om Mehra, Technical Research Analyst, SAMCO Securities, the Nifty 50 index is likely to find support at 23,230, followed by 23,150, while on the upside, 23,620 remains a crucial resistance level.
“A sustained move above this level would be needed to strengthen the recovery. Until then, any rebound is likely to remain muted and short-lived,” Mehra said.
The daily RSI is currently at 27.66 and remains in a falling mode, while the weekly RSI is approaching the crucial 40 mark and continues to trend lower.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities noted that the Nifty 50 formed a green candle on the daily chart on Friday, indicating formation of a bullish meeting line type candle pattern.
“Normally, such formations more often result in bottom reversal pattern after the confirmation. Hence a sustainable gain for one more session by this week could confirm short term bottom reversal for the Nifty at the lows,” said Shetti.
The bearish lower high and lower low formation is intact on the daily chart and Nifty is currently in the process of forming a new lower bottom at the lows. Bounce back towards 23,600 could be a strong hurdle for the market for next week. Any further weakness could find support around 23,250 levels, added Shetti.
Bank Nifty Outlook
Bank Nifty index outperformed the frontline indices and ended higher by 134.60 points, or 0.24%, at 56,606.55 on Friday. For the week, the banking index shed 1.33% and formed a bearish candle on the weekly chart with a long lower shadow, reflecting buying interest at lower levels.
“Technically, the Bank Nifty index is currently hovering around its 200-day EMA, while continuing to trade below its 20-day, 50-day and 100-day EMAs. Momentum indicators suggest a phase of consolidation rather than a decisive trend. During the week, the daily RSI slipped below the 40-mark, indicating weakness; however, Friday's rebound helped the indicator recover from lower levels,” said Sudeep Shah, Vice President - Technical and Derivatives Research at SBI Securities.
Going forward, he believes the 56,000 – 55,900 zone is expected to provide crucial support for the Bank Nifty index, and on the upside, the 57,000 – 57,100 region will remain a key resistance.
“A sustained move above 57,100 could trigger a strong pullback, potentially lifting the index towards the 58,000-mark in the near term,” Shah said.
What Should Be Stock Market Strategy This Week?
The global geopolitical uncertainty surrounding the US-Iran war in the Middle East, rising crude oil prices, and the recent spike in bond yields, warrants caution. The US Fed's interest rate decision remains another key determinant of near-term market direction. The movement in rupee and the flow of foreign funds will also drive the market sentiment.
Amid the prevailing volatile environment, Shah advises investors to avoid taking overleveraged positions, while maintaining risk management and disciplined position sizing until market conditions stabilize.
Ajit Mishra, SVP, Research at Religare Broking said investors should adopt a selective and measured approach, focusing on companies with strong balance sheets, resilient earnings visibility and lower sensitivity to crude oil prices and global demand.
“Fresh positions should be staggered, with greater emphasis on risk management until the external environment stabilises,” said Mishra.
For traders, he said positions should be managed through disciplined position sizing and clearly defined stop-losses, while aggressive exposure during sharp market swings should be avoided.
Among sectors, Shah said that Nifty Financial Services, IT, Oil & Gas, Auto, Commodities, FMCG, Realty, Cement and CPSE continue to exhibit relative weakness from a technical standpoint and are likely to remain under pressure in the near term.
In contrast, Nifty Pharma and Healthcare continue to display strong relative strength and are expected to sustain their outperformance against the broader market, he added.
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