Nifty sinks under 24,000, Sensex cracks 900 points while banking stocks, broader markets bleed; bears erase Rs 7.5 lakh crore in value

Nifty 50 ended the April series with a strong 655 point gain.

Indian equities were off to a weak start on Friday, the April 25 session, dragged by losses from the banking pack, as bulls continued their pause. Bears took over Dalal Street, leading to Rs 7.5 lakh crore in market capitalization being wiped off.

At 10:06 am, the Sensex was down 881.49 points or 1.10 percent at 78,919.94, and the Nifty was down 285.05 points or 1.18 percent at 23,961.65. About 436 shares advanced, 2702 shares declined, and 101 shares unchanged.

The broader markets saw weakness, underperforming the benchmarks. The Nifty Smallcap 100 index sank 3 percent, while the Nifty Midcap 100 index was 2.5 percent down.

On the sectoral front, all indices traded in the red. The banking pack saw the highest selling pressure, with the Bank Nifty, Nifty Private Bank, and Nifty PSU Bank trading with sharp cuts.

In the previous session, the Nifty 50 index ended the rollercoaster April series with a strong 655-point gain, rising 2,500 points from the lows. April-May rollovers were in line with the average, while FII long exposure stood at 41 percent, with net contracts at their lowest since October 2024.

The May series kicks off on Friday, with an all-time high open interest of 1,150 crore shares, as against 1,145 crore shares at the beginning of the April series. "The increase in OI coupled with the average gain of 4.8 percent of the F&O stocks, suggests long build up along with the short covering," said Devarsh Vakil, Head of Prime Research, HDFC Securities.

Caution weighs on sentiment

Indian equity markets are turning cautious, assessing the possible fallout of the Pahalgam terror attack, with most investors weighing the scale of India's potential military and diplomatic responses, before placing further bets. Experts say while the market's initial reaction was measured, any significant escalation could unhinge sentiment rapidly.

Meanwhile, muted earnings and a rebound in foreign flows - driven by tactical shifts from active managers - are pulling markets in opposite directions, likely leading to consolidation rather than a decisive breakout.

The Nifty 50 has been largely flat to negative in the past two sessions, which is a 'tacit acknowledgement by the market that we need to wait and watch', said Sunil Singhania of Abakkus Asset Manager. The veteran money manager said if the conflict remains contained to the region, there may not be a major impact on equities. However, valuations remain stretched. “It’s a tough market. From these levels, it will consolidate,” he said.

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Global markets bullish

Treasury Secretary Scott Bessent said the U.S. may reach an “agreement of understanding” on trade as soon as next week. As a result, Wall Street rallied sharply on Thursday, with technology stocks leading the pack, amid hopes of optimism on the tariffs front.

The Dow Jones Industrial Average jumped 1.3 percent, S&P 500 gained 2.1 percent, while the tech-heavy Nasdaq Composite soared around 2.7 percent, as all the "Magnificent Seven" megacap stocks all gained.

Asian shares rose at the open Friday after optimism about the Federal Reserve cutting rates sooner than anticipated powered a rally in U.S. stocks and Alphabet Inc. reported solid earnings. Shares in South Korea rose, with the Kospi index up 1.1 percent, while the Nikkei 225 soared 1.4 percent. The Taiwan benchmark surged 2.6 percent, early Friday morning.

 Technical levels to watch

The Nifty index would have the near-term significant support positioned near the 23,800 zone which once sustained, can regain strength and with the overall trend maintained strong, can carry on with the positive move further ahead. The resistance for the index is seen at 24,400 levels, said Vaishali Parekh Vice President - Technical Research, PL Capital.

Derivatives setup

The derivatives setup is starting to reflect a shift in sentiment from aggressive bullishness to a more cautious tone. Call writers have stepped up their activity, outpacing put writers, suggesting the first signs of bearish bets building.

"Substantial open interest at the 24,500 strike (25.22 lakh contracts) marks it as a short-term ceiling, while strong put writing at the 24,000 strike (29.90 lakh contracts) underpins solid support just beneath the current market level," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

Strategy for investors

Going ahead, some key triggers for May include Q4 results, the FOMC meeting, and global developments.

Further, the sentiment remains cautious amid signs of escalation in geopolitical tensions between India and Pakistan after the Pahalgam terror attack. India responded by suspending the Indus Water Treaty and downgrading diplomatic ties with Pakistan.

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