Indian markets snapped its three-week winning streak amid tensions between India and Pakistan. The NIFTY50 index lost over 1% despite positive global cues like the U.S.-U.K. trade deal and a free-trade agreement between the U.S and India.
The broader markets also declined and ended the week in the red. The NIFTY Midcap 100 index slipped 0.9%, while the Smallcap 100 index slumped 2.1%.
Most sectors bore the brunt of the decline, with Realty (-6.5%), PSU Banks (-4.3%) and Pharma (-2.5%) losing the most. In contrast, the Automobiles (+1.5%) and Media (+1.3%) sectors bucked the trend, showing resilience.
Index breadth
The NIFTY50 index witnessed profit-booking as 90% of its stocks traded above their 50-day moving average. The index hit a similar threshold in September 2024 and witnessed a sharp decline. However, it is important to know that the broader breadth of the index still remains above the 50% threshold. Unless the breadth remains comfortably above 50%, the index may consolidate and remain range-bound. A break below the 50% reading would signal weakness.
FIIs positioning in the index
In the cash market, the FIIs remained net buyers last week and bought shares worth ₹5,086 crore. The Domestic Institutional Investors (DIIs) also remained net buyers and purchased shares worth ₹10,450 crore.
NIFTY50 outlook
The NIFTY50 index ended the week below previous week’s low and formed a bearish engulfing pattern on the weekly chart. It failed to cross the crucial resistance around the 24,800 level and faced rejection around the 24,500 on a closing basis. Meanwhile, the index has immediate support around the 23,800 zone. Unless the index breaks this range on a closing basis, the trend may remain range-bound. A break of this range on a closing basis will provide further directional clues.
SENSEX outlook
The SENSEX also formed a bearish candle on the weekly chart and ended the week on a negative note. However, it protected the crucial support zone of ₹78,600 on a closing basis and is currently consolidating at higher levels. The index has crucial resistance around the 82,300 zone and support is around 77,600 zone. Within this range, the index can remain sideways.
🗓️Key events in focus: On the global front, the U.S. will release its Consumer Price Index (CPI) data for April on Tuesday 13th May. This report will be the first inflation-related data to potentially reflect the impact of the tariffs announced by the Donald Trump administration on April 2, which went into effect shortly thereafter.
Meanwhile, on the domestic front, India’s Consumer price Index (CPI) data for April will be released on May 12. The April reading is expected to ease further to 3.27% YoY from 3.34% YoY in the previous month. Additionally, the Wholesale Price Index (WPI) for April 2025 will be released on 14 May, highlighting inflation at the producer level.
📈📉Earnings blitz: The fourth quarter earnings season is entering its final leg and the key companies that will be reporting results are UPL, SRF, Tata Steel, Bharti Airtel, Cipla, GAIL, Tata Motors, Hindustan Aeronautics, Tata Power, Jubilant FoodWorks, BHEL and Divi’s Laboratories.
📌Spotlight: Defence stocks drew attention amid rising India-Pakistan border tensions, fueled by expectations of higher government spending and growing export prospects. Leading names such as Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics and Paras Defence posted gains, supported by strong order books and new contracts. Drone-focused companies such as ideaForge and Zen Technologies also posted strong gains.
🛢️Oil: Crude prices rebounded last week boosted by renewed optimism over U.S.-China trade talks and signs of tightening inventories. The West Texas Intermediate settled at $61.27, up over 4% for the week. Rebound from the crucial support levels and improved sentiment lifted prices.
📓✏️ **Takeaway: ** Amid rising uncertainties and escalating India-Pakistan tensions, markets showed notable resilience. The NIFTY50 index ended the week on a negative note but protected the crucial support zone of 23,800 on a closing basis. Meanwhile, volatility index—India VIX jumped 18% to 21, highlighting heightened nervousness.
From a technical perspective, unless the index breaks the crucial support zone of 23,800 on a closing basis, it may consolidate its gains. A break below this zone could signal further downside. On the upside, resistance is around 24,600 zone.
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