We had mentioned last week about the technical “hurdles” in Nifty’s weekly close above the 25693 level. Although Nifty held up well from the beginning of this week, by the end of the week, it displayed a contrary nature again. The picture became complete when the two major indices, IT and Banking, along with the Metal index—which had been surging ahead this year—faced selling pressure, and even the FMCG sector, described as defensive, bowed down. Nifty closed at 25471, down from the 26000 level seen mid-week. Let’s see what to expect in the coming days.
Whether it is the fear of AI, Trump’s tariff policies, or the Union Budget, the fact is that excessive anxiety is building up among market participants, regardless of the various reasons. This is what is being reflected in prices. It may seem paradoxical that the market is continuously trying to turn to the opposite side as each event passes. The notable thing is that it makes no difference whether the news is good or bad. Although there was a good comeback two weeks ago, the fact that it ended just near the all-time high and subsequently formed a ‘lower high, lower bottom’ pattern is indeed a matter of some concern. Along with this, the fact that selling pressure at the 26300 level became strong for the third time should also be read in conjunction with this.
This is where the performance of three or four indices becomes significant. Especially the previously mentioned IT, Banking, and Metal indices, and then the Nifty Infra index. The IT index reached the level of 31422 last Friday, down from 40301 where it stood at the beginning of this month. The fear of major changes that might occur in the IT sector with the arrival of AI was indeed the reason for the heavy selling in IT stocks globally. Since this sudden initial reaction is never based on a clear picture, the subsequent moves are important in this sector now. The Nifty IT index is now standing very close to critical supports like 29401-28529-28483. What needs to be watched in the coming days is whether a situation arises where these are lost. If these hold, this will end as just an overreaction, and many excellent IT stocks will bounce back. Now, on the upside, the resistance line at the 36226 level needs to be watched. If it can cross and sustain above this, it can certainly be taken as positive.
Next to watch is Bank Nifty, which has good weightage in Nifty. Although it reached the target of 61695 we mentioned earlier, it could not cross and sustain there, and closed last week losing the key level of 60284. If this cannot be held, it is certainly not a good sign. If so, a correction towards levels of 57995-53258 is what should be expected in the market. These two indices together carry nearly half the weightage in Nifty. Therefore, the movements of these indices will significantly affect Nifty.
The Nifty Infra index closed at 9542 last week. This time too, the Infra index faltered just near the all-time high of 9793. Closing above the 9769 level is paramount for the forward journey of this index. If this is not achieved, it would not be surprising if the ensuing correction takes this index down to 6690. Next to watch is the Nifty Metal index. Although the Metal index still holds key supports (9832), the fact that its two major weighted stocks—Tata Steel losing the two key levels of 203.70-208, and Hindalco losing the two key levels of 1018-973 on a closing basis—is a matter of concern. Therefore, the movements of these stocks are also important.
Let’s look at what levels to watch in Nifty in the coming days. To recover from the impact of the current fall, the first requirement is to be able to close above the resistance lines of 25562-25606 in the coming days. If this becomes possible, then the resistance zone at the 25900-26010 level needs to be crossed subsequently. Only if both of these are achieved and subsequently the final level within the 25210-26373 range is also crossed, can a comeback be expected. Now let’s see which levels to watch on the downside. Closing below the 25356 level is the first sign of the fall continuing; later, another major support at the 25050 level will become crucial. If this is also lost, the support at the 24572-24404 levels and the support at the 24200 level will be the last hope for bulls.