By VK Sharma
The Nifty fell 276 points, or 1.12%, for the week to close at 24,363, with most of the decline coming on Friday when the benchmark slipped 233 points, or 0.95%. This marks the sixth consecutive weekly loss — a streak last seen in March 2020 during the dreaded Covid period. While the drop from the recent swing high is a modest 4.97%, the relentless slide has left investors gasping for breath. The downturn has been driven by sustained FII selling, reflected in the weakness of the rupee, which has now fallen for the fifth straight week.
The Nifty has now closed below its 100-day moving average (dema), having already slipped under its 20- and 50-day dema earlier. For the past twelve sessions, it has not managed a single close above its five-day dema.
So, where could the markets take support?
Key technical support levels in focus
Last fortnight, we had opined that support for the Nifty could emerge at 24,170, corresponding to a 38.2% Fibonacci retracement of the sharp April–June rally. In addition, traders should watch trendline No. 70, drawn by connecting the highs of 23,807 (week ending 7 February) and 23,872 (week ending 17 April). On its extended path, this trendline points to possible support near 24,060 next week — but only if the 24,170 level fails to hold.
Trade war rhetoric and market resilience
Coming back to trade wars, let me put things in perspective. Once a 25% tariff on India was floated by Trump, any subsequent hike — even to 50% — became largely symbolic. In reality, business turns unviable once tariffs hit the 10–15% range. Trump’s escalations were more about raising geopolitical temperatures than about practical trade policy. India, for its part, has made it unequivocally clear that it will not open its agriculture and dairy sectors, regardless of the pressure.
India’s firm stand has become a rallying point for other countries — large and small — to call America’s bluff on tariffs. In a surprising twist, even China backed India, stating that “India’s sovereignty is non-negotiable”.
We are essentially a domestic consumption–driven economy, with over 64% of GDP coming from within. This strong internal demand base should ultimately help us weather any tariff storm that Trump might send our way.
As of last Friday, 91% of FIIs’ positions in index futures were on the short side, up from 85% at the start of the August series. Since March 2020, there have been four other instances when FII short positions were at 85% or higher at the beginning of a series — and in all four cases, the Nifty went on to gain an average of 7% during that series.
At any point in time, if the change in sentiment happens, the rebound could be sharp as the FIIs scamper to cover their positions.
(The writer is a technical analyst & former head of clients’ group, HDFC Securities)
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