International indications remain negative with no explanation for the length of the conflict. An energy crisis could lead to further declines amid high volatility.
India’s fear index VIX is up 120% in three months and is now hovering around 22.65.
Analyst Sudeep Shah, Vice President, Technical and Derivatives Research at SBI Securities, spoke to ETMarkets about the Nifty and Bank Nifty outlook, as well as the index’s strategy for the coming week. Edited excerpts of his conversation are below:
Q: The Nifty ended sharply at 23,151.10, down 5.3% on the week. Do Nifty Charts Suggest Blood Warming Next Week?
The bloodshed on Dalal Street continued for a third straight week, as prolonged geopolitical tensions between the United States and Iran weighed on investor sentiment. The magnitude of the correction has increased significantly over the past three trading sessions, with the benchmark Nifty index correcting more than 5% during the week, marking its steepest weekly decline since June 2022. Auto and banking stocks were major contributors to the decline, dragging the index lower. However, the major driver behind this rapid sell-off may not be geopolitical tensions alone.
One of the major factors weighing on the market is the sharp fluctuations in crude oil prices. Last week, Brent crude cooled to a low near $80.29, offering some temporary relief to markets. However, prices soon began their upward trajectory and are now approaching $100, which again hurt investor sentiment. Additionally, concerns about gas shortages and supply disruptions following the Strait of Hormuz have added to uncertainty in many industries. But the real concern for the market becomes clear when we look at the technical structure of the index.
Also Read: FIIs sell Indian equities worth Rs 52,704 crore in March so far; Friday recorded its highest one-day flow in 2026
From a technical perspective, the index remains in a strong downtrend, with declining momentum in recent sessions. In the last 27 trading sessions, the Nifty has corrected more than 12%, making it one of the sharpest declines in recent times. Notably, the indicator has been forming a weekly candle with a long upper shadow for the past two weeks, indicating that any reversal is witnessing selling pressure. This pattern suggests that market participants use any rise as an opportunity to exit a position.
Further, the index is now closed from the 61.8% Fibonacci retracement level of its previous rally from 21,743 to the all-time high of 26,373, suggesting a weak technical formation. Such a breach of a key retracement level often indicates that the market may need more time before finding a bottom. Momentum indicators also reflect strong bearish momentum. The weekly RSI fell to 30.43, the lowest level since the COVID-19 market crash. This raises an important question – how long can the correction last from here?
Going forward, the 22,850-22,800 zone will act as immediate support for the index. A sustained move below 22800 could lead to further correction towards 22,500. On the upside, 23,450-23,500 will act as immediate resistance.
Q: What does the F&O data suggest about Bank Nifty which was one of the worst performing indices, sliding 7%?
The banking benchmark index, Bank Nifty also witnessed a sharp correction in the recent sessions and significantly underperformed the front-line indices, reflecting continued selling pressure in banking heavyweights. In the last week alone, the index has fallen by almost 7%, and significantly, it has broken out of its weekly ascending channel, marking a clear change from unity to weakness in the medium-term trend.
From its last close of 61,678, Bank Nifty has corrected nearly 13% in just 15 trading sessions, indicating the magnitude and speed of the ongoing decline. Such a sharp decline in the short term generally reflects the aggressive volatility and risk aversion of positions in the banking sector.
From a technical point of view, the setup remains decidedly bearish. All key moving averages and momentum-based indicators are aligned to the downside, confirming the current negative trend. The weekly RSI is currently hovering around 34.56, which marks its lowest level in recent years, suggesting continued weakness and a lack of meaningful buying interest despite a sharp correction.
Looking ahead, the 53,400-53,200 zone is expected to act as an important support area for the indicator, as there is horizontal trend line support in this area. However, any sustained break below the 53,200 level could further increase selling pressure and lead to a move down towards 52,500, followed by 51,800 in the short term. On the downside, any pullback or relief rally may face strong resistance in the 54500-54600 zone, which is expected to act as an immediate barrier and may attract fresh selling interest.
Question: India’s VIX has climbed above the 22 mark, up 13% this week. Which sectors can help investors weather this volatility?
India’s VIX rose above 22, indicating market volatility and investor caution. Historically, the VIX has moved inversely with the Nifty, so rising VIX often coincides with falling equity markets. In such phases, defensive sectors perform better, while cyclical sectors lag behind. Investors looking for this volatility can focus on FMCG, Pharma, CPSE and PSE, which offer stable returns and flexibility against market fluctuations. Gold can provide a hedge through ETFs. Conversely, the financials, consumer discretionary, and auto sectors typically underperform during periods of high VIX. A viable approach is sector rotation: reduce exposure to high-beta sectors and increase allocation to defensive sectors, balancing risk during potential pullbacks.
Q: What should investors do with the auto stocks (Nifty Auto up 11%) that have ended the investor frenzy?
Nifty Auto corrected sharply, nearly 10% in just three days, with key stocks like TVS Motors, Bajaj Auto, Maruti, M&M, Eicher Motors, and Hero MotoCorp falling below their 200-day EMA, a key long-term support. Technical indicators indicate bearish movement: RSI is below 40 and falling for most stocks, while ADX is rising, indicating weak strength. The Relative Rotation Graph (RRG) places the Nifty Auto in the weak quadrant, indicating a lack of counter-movement. In this environment, it is advised not to under fish. Investors should wait for signs of stability, such as RSI recovering above 40 or prices holding above key support levels, before considering fresh exposure. Patience is very important at this stage.
Q: Another concern weighing on Indian markets is the weak rupee, and as the dollar hits a 4-month high, it looks like a double whammy. What range do you see for Rs.
USDINR broke from its previous swing high of 92.10-92.20 and closed higher, indicating continued dollar strength. Rising crude oil prices are a key driver, as higher oil prices in dollar terms increase demand for the currency, putting additional pressure on the rupee. A strong dollar also affects foreign exchange reserves and can stem FII inflows, as it erodes the value of their investments in India. Immediate support for USDINR is at 91.70-91.60, and as long as the pair trades above this zone, the rupee is likely to remain under pressure. Investors should closely monitor crude oil trends, as sustained higher prices could keep the rupee weaker in the near term.
Also Read: FIIs sell Indian equities worth Rs 52,704 crore in March so far; Friday recorded its highest one-day flow in 2026
Q: Truth, ATGL and Happy Minds are the star players this week, while Amber Enterprises, PG Electroplast and Sapphire are the big losers. What should investors do with them?
This week’s top performers, FACT, ATGL, and Happy Minds bounced back quickly but are facing key resistance levels. Truth emerges from 652 but faces resistance in 910–920; A sustained move above this can extend the return period. ATGL rose above 463 and briefly crossed the 200-day EMA, with 640-650 serving as strong resistance; An upward move may pick up once this zone is broken. Bullish minds bounced back from 330 but stalled at its 100-day EMA, with 440-450 as a key resistance level.
Among laggards, Amber Enterprises has recovered nearly 21% from February highs, RSI below 40; As long as it trades below 6700-6800, the trend is bearish. PG Electroplating is hovering near support at 506-496, and a break could extend weakness. Sapphire continues the low-low, low-high pattern with ADX signaling trend strengthening; Below 185-190, the bearish bias continues. Investors should monitor resistance and support levels before taking a position.
((rejection: The recommendations, suggestions, opinions and views given by the experts are their own. (It does not represent the views of The Economic Times.)
