Indian heartbeat indices recorded their third successive decline on Friday as the Iran-Israel/US war continued to adversely impact market sentiments. In a volatile session, the biggest drags were metals, auto, and financial stocks, engineering the Nifty plunge by 488.05 points, or 2.06%, to close at 23,151.10, while the 30-share Sensex declined 1470.50 points, or 1.93%, to settle at 74,563.92.

Global cues remain negative with no clarity on the longevity of the war. The energy crisis could lead to a further downside amid high volatility.

Fear index India VIX is up 120% over a three-month period and is now hovering around 22.65.

Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Q: Nifty ended sharply lower at 23,151.10, dropping 5.3% on a weekly basis. Do Nifty charts suggest more bloodbath next week?

The bloodbath on Dalal Street continued for the third consecutive week, as the prolonged escalation of geopolitical tensions between the US and Iran dented investor sentiment. The intensity of the correction increased significantly during the last three trading sessions, with the benchmark Nifty index correcting over 5% during the week, marking its sharpest weekly fall since June 2022. The Automobile and Banking stocks were the major contributors to the decline, dragging the index lower. However, the bigger trigger behind this sharp sell-off may not be just geopolitical tensions alone.

One of the key factors weighing on the market has been the sharp volatility in crude oil prices. Last week, Brent crude cooled off and touched a low near $80.29, offering some temporary relief to the markets. However, prices soon resumed their upward trajectory and are now quoting close to $100, which has again dented investor sentiment. Additionally, concerns over gas shortages and supply disruptions following the Strait of Hormuz squeeze have added to uncertainty across several industries. But the real concern for the market becomes clearer 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 records its highest single-day outflow in 2026

From a technical perspective, the index remains in a strong downtrend, with the pace of the fall turning sharper in recent sessions. Over the last 27 trading sessions, Nifty has corrected more than 12%, making it one of the sharpest declines in the recent past. Notably, the index has been forming weekly candles with long upper shadows over the last two weeks, indicating that every pullback is witnessing selling pressure. This pattern suggests that market participants are using every rise as an opportunity to exit positions.
Further, the index has now closed below the crucial 61.8% Fibonacci retracement level of its prior rally from 21,743 to the all-time high of 26,373, suggesting a weakening technical structure. Such a breach of a key retracement level often signals that the market may need more time before finding a meaningful bottom. Momentum indicators are also reflecting strong bearish momentum. The weekly RSI has slipped to 30.43, its lowest level since the COVID-19 market fall. This raises an important question — how much further can the correction extend from here?

Going ahead, the 22,850–22,800 zone will act as immediate support for the index. A sustainable 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 among the worst-performing indices, sliding 7% WoW?

The banking benchmark index, Bank Nifty, has also witnessed a sharp correction in recent sessions and has significantly underperformed the frontline indices, reflecting sustained selling pressure in banking heavyweights. Over the last week alone, the index has declined by nearly 7%, and notably, it has broken down from its rising channel on the weekly chart, signalling a clear shift in the medium‑term trend from consolidation to weakness.

From its recent peak of 61,678, Bank Nifty has corrected by nearly 13% within just 15 trading sessions, highlighting the intensity and speed of the ongoing decline. Such a sharp fall over a short span typically indicates aggressive unwinding of positions and heightened risk aversion within the banking space.

From a technical standpoint, the setup remains decisively bearish. All key moving averages and momentum‑based indicators are aligned on the downside, confirming the prevailing negative trend. The weekly RSI is currently placed around 34.56, which marks its lowest level in recent years, suggesting persistent weakness and lack of meaningful buying interest despite the sharp correction.

Looking ahead, the 53,400–53,200 zone is expected to act as an important support area for the index, as a horizontal trendline support is placed in this region. However, any sustained breakdown below the 53,200 level could further aggravate selling pressure and open the downside towards 52,500, followed by 51,800 in the short term. On the upside, any pullback or relief rally is likely to face strong resistance in the 54500–54600 zone, which is expected to act as an immediate hurdle and may attract fresh selling interest.

Q: India VIX has shot up above the 22 mark, rising 13% this week. Which sectors can help investors ride this volatility?

India VIX has surged above 22, signalling heightened market volatility and investor caution. Historically, VIX moves inversely with the Nifty, so rising VIX often coincides with falling equity markets. In such phases, defensive sectors tend to outperform, while cyclical sectors lag. Investors looking to navigate this volatility can focus on FMCG, Pharma, CPSE & PSE, which offer stable earnings and resilience against market swings. Gold can also provide a hedge, either through ETFs. Conversely, Financials, Consumer Discretionary, and Auto sectors typically underperform during high VIX periods. An actionable approach is sector rotation: reduce exposure to high-beta sectors and increase allocation to defensive ones, balancing risk while participating in potential rebounds.

Q: What should investors do with auto stocks (Nifty Auto down 11% WoW), which have been at the receiving end of investors’ ire?

Nifty Auto has corrected sharply, down nearly 10% in just three days, with key stocks like TVS Motor, Bajaj Auto, Maruti, M&M, Eicher Motors, and Hero MotoCorp slipping below their 200-day EMA, a critical long-term support. Technical indicators point to bearish momentum: RSI for most stocks is below 40 and falling, while ADX is rising, signalling strengthening downside. The Relative Rotation Graph (RRG) places Nifty Auto in the weakening quadrant, highlighting a lack of counter-momentum. In this environment, it is advisable not to bottom fish. Investors should wait for signs of stabilisation, such as RSI recovery above 40 or prices holding above key support levels, before considering fresh exposure. Patience remains crucial during this bearish phase.

Q: Another concern that engulfs Indian markets is rupee weakness, and as the dollar has hit a 4-month high, it looks like a double whammy. What range do you see for the rupee?

USDINR has broken above its previous swing high of 92.10–92.20 and closed higher, signalling continued dollar strength. Rising crude oil prices are a key driver, as higher crude invoicing in dollars increases demand for the currency, putting additional pressure on the rupee. A stronger dollar also impacts foreign exchange reserves and can deter FII inflows, as it erodes the value of their investments in India. The 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 monitor crude oil trends closely, as sustained high prices could keep the rupee weak in the near term.

Also read: FIIs sell Indian equities worth Rs 52,704 crore in March, so far; Friday records its highest single-day outflow in 2026

Q: FACT, ATGL and Happiest Minds have been star performers this week, while Amber Enterprises, PG Electroplast and Sapphire have been big losers. What should investors do with them?

This week’s outperformers, FACT, ATGL, and Happiest Minds have shown sharp rebounds but face key resistance levels. FACT bounced from 652 but faces resistance at 910–920; a sustained move above this could extend the pullback. ATGL rose from 463 and briefly crossed its 200-day EMA, with 640–650 acting as strong resistance; upside momentum may pick up once this zone is breached. Happiest Minds recovered from 330 but stalled at its 100-day EMA, with 440–450 as the critical resistance level.

Among laggards, Amber Enterprises has corrected nearly 21% from its Feb high, with RSI below 40; as long as it trades below 6700–6800, the trend remains bearish. PG Electroplast hovers near support at 506–496, and a breakdown could extend weakness. Sapphire continues a lower-low, lower-high pattern, with rising ADX signalling trend strength; below 185–190, bearish bias persists. Investors should monitor resistance and support levels before taking positions.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)