The equity benchmarks closed sharply lower on Friday, extending losses for the sixth straight session amid weak global cues, sustained foreign fund outflows and pressure on IT and pharma shares.
The Sensex declined 733.22 points or 0.9 percent to settle at 80,426.46, its lowest closing in three weeks. During the day, it tumbled 827.27 points or 1 percent to 80,332.41. The broader Nifty dropped 236.15 points or 0.95 percent to settle at 24,654.70, also at a three-week low.
Since September 19, the Sensex has fallen 2,587.50 points or 3.16 percent, while the Nifty has shed more than 3 percent over six sessions.
The sell-off was broad-based with pharma and IT shares leading declines after the US announced tariffs on branded drugs. Weak guidance from Accenture and concerns over visa policy changes further dragged IT stocks. Persistent foreign institutional investor (FII) selling and a depreciating rupee added to the pressure.
The Nifty Midcap100 and Smallcap100 indices dropped 2.05 percent and 2.26 percent, respectively, underperforming frontline gauges. Market breadth remained weak with 459 stocks out of the Nifty 500 ending in the red.
Mahindra & Mahindra, Eternal, Tata Steel, Bajaj Finance, Asian Paints, Sun Pharma, Tech Mahindra, Infosys, Tata Consultancy Services and HCL Tech were the biggest laggards. However, Larsen & Toubro, Tata Motors, ITC and Reliance Industries were the gainers.
Should you buy the dip or is further fall coming?
Analysts said technical indicators point to more weakness in the near term.
"The RSI is trending downwards, settling just below the 40 level, which suggests weakening momentum and potential further downside. Nifty broke below the midline of the Bollinger Bands, indicating increased bearish momentum. The 24,450–24,500 zone will act as a crucial support. A slip below 24,450 could take the index to 24,200, while resistance lies around 24,850–24,900," said Sudeep Shah, Head - Technical Research and Derivatives, SBI Securities.
Ajit Mishra, SVP, Research, Religare Broking Ltd, said, "Nifty is now approaching its key support near the 200 DEMA around 24,400. The sharp correction in mid- and small-cap stocks has further dampened sentiment. We recommend a cautious approach—focusing on fundamentally strong stocks while avoiding aggressive directional bets until clearer signals emerge."
On the Bank Nifty, Shah said the index has slipped below its 100-day EMA level of 54,901, extending its decline for the third straight day. "The index formed a sizeable bearish candle on the weekly chart, facing resistance around the 55,600–55,650 zone, which coincided with the midline of the Bollinger Bands. The 54,100–54,000 band will act as immediate support. A break below 54,000 may trigger a fall towards 53,500, while resistance is seen at 54,900–55,000," he added.
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