The broader indices underperformed the main indices, losing between 1 and 2.5 percent in the week ended August 1, amid subdued earnings, continued FII selling, dollar appreciation, and trade tensions after US President Donald Trump announced a 25% tariff on Indian goods.
For the week, the BSE Large-cap Index shed 1.2 percent, the BSE Mid-cap Index declined 1.8 percent, BSE Small-cap Index shed 2.5 percent.
However, the BSE Sensex index declined 863.18 points or 1.05 percent to end at 80,599.91, while Nifty50 fell 271.65 points or 1.09 percent to close at 24,565.35. For the month of July, Sensex and Nifty lost nearly 3 percent each.
The Foreign Institutional Investors (FIIs) extended their selling in their fifth consecutive week, as they sold equities worth Rs 20,524.42 crore; however, the Domestic Institutional Investors (DIIs) continued their buying in the 15th week, as they bought equities worth Rs 24,300.05 crore.
In this month on July, FII sold equities worth Rs 47,666.68 crore, while DII bought equities worth Rs 60,939.16crore.
On the sectoral, the Nifty Realty index slipped 5.7 percent, the Nifty Metal index shed 3.4 percent, Nifty PSU Bank index declined 3.2 percent, the Nifty Media index fell 3 percent; however, the Nifty FMCG index rose 3 percent.
"Domestic equity market navigated a volatile week marked by heightened uncertainty surrounding trade negotiations and subdued earnings. The market oscillated between cautious optimism and defensive positioning, ultimately ending lower due to a persistent FII outflow," said Vinod Nair, Head of Research, Geojit Investments.
"With global headwinds, investors showed a preference for domestically driven stories with non-discretionary appeal, as broader sentiment turned selective. FMCG stocks stood out, benefiting from attractive valuations and insulation from external shocks, particularly amid escalating tariff threats."
"Globally, markets remained under pressure due to rising US inflation and hawkish signals from the Fed and BoJ, dampening hopes of immediate easing of interest rates, which weighed heavily on emerging markets."
"Going forward, investors will closely monitor the upcoming RBI rate decision next week, while the risks remain tilted to the downside. A stable inflation outlook, potential progress in trade talks, and selective strength in domestic sectors are anticipated to lay the groundwork for a recovery," he added.
The BSE Small-cap index shed 2.5 percent with Home First Finance Company India, Zen Technologies, Paras Defence and Space Technologies, Redington, Five-Star Business Finance, SML Isuzu, Kitex Garments, Faze Three, Blue Dart Express, Sportking India, Sindhu Trade Links, Indo Tech Transformers, Mangalore Refinery and Petrochemicals, Himatsingka Seide falling between 10-17 percent. On the other hand, Jayaswal Neco Industries, Saurashtra Cement, Vimta Labs, Advait Energy, CarTrade Tech, Bliss GVS Pharma, and Sudarshan Chemical Industries gained between 15-24 percent.
Where is Nifty50 headed?
Rupak De, Senior Technical Analyst at LKP Securities
Nifty witnessed another sharp decline as it failed to reclaim the 200-DMA on the hourly chart, despite a strong recovery on Thursday. On Friday, the index remained below the 50-EMA on the hourly timeframe. On the daily chart, it has broken below the recent consolidation support at 24,600.
Sentiment remains weak, with the potential for the correction to extend towards 24,400–24,450. A further decline is likely if it slips below 24,400; otherwise, a recovery can be expected. On the higher side, resistance is seen at 24,600–24,650 and 24,850.
Ajit Mishra – SVP, Research, Religare Broking
Markets began the August series on a negative note, extending the prevailing corrective trend, and ended lower by over half a percent. Markets continue to grapple with a mixed earnings season, while the recent tariff announcement and persistent foreign fund outflows are further weighing on sentiment.
Nifty is now approaching its next crucial support at 24,450; a breach of this level could trigger a retest of the long-term moving average, the 200-day EMA, near 24,180. On the upside, the 24,800–25,000 zone is expected to act as a strong hurdle. We maintain our cautious stance and continue to recommend a hedged approach with a negative bias until clear signs of reversal emerge.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities
Nifty is currently placed near the crucial support of around 24500 levels (multiple swing lows of May-June 25), but the sustainable recovery has not emerged from near the support so far. The bearish lower highs and lower lows pattern is intact on the daily chart.
Nifty on the weekly chart formed a reasonable negative candle this week, which is the fifth consecutive bearish candle formation on the trot. The previous sharp upside breakout of the larger range movement of last month has been completely negated, and the market slipped below the immediate support zone of the 24600 mark.
The underlying trend of Nifty remains weak. A decisive move below the support of 24500, Nifty could slide down towards the next lower area of 24100-24000 levels in the near term. Immediate resistance is placed at the 24950 levels.
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