We are likely in recovery mode, market sentiment isn't as weak as it looks: Indiacharts' Rohit Srivastava

India’s falling bond yields suggest a continued trend of lower interest rates, aligning with global rate cuts (except Japan), said Rohit Srivastava.

Technical indicators are looking positive, with a recovery possibly around the corner according to Indiacharts' Founder and Market Strategist Rohit Srivastava.

Srivastava, in a conversation with Moneycontrol, said that a worst-case support level for Nifty is at 22,930 and the upside would be 1,000 points away at 24,600, where the market could pause and see some consolidation.

Rohit, did you expect a steeper market correction, or does today’s resilience surprise you?Not surprised. I expected a bounce. Markets price in known events, and fear peaks at the announcement. That often marks the turning point. Today’s move could be the worst-case scenario. Some downside risk remains, but key supports are around 22,930—the 61% retracement of the past six-day rally and the 20-day moving average.

Mid- and small-cap indices, along with Bank Nifty, are holding up well. Even during the decline, market breadth remained positive. That tells me sentiment isn’t as weak as it looks. We’re likely in recovery mode.

What do bond yields and the dollar charts suggest in the near and medium term?

Since October, U.S. bond yields have attempted to push higher but failed to make new highs, forming a double top. Yields have been falling, alongside capital flows shifting away from the U.S.

I expect U.S. bond yields to drop further—possibly to 3.5%—and the DXY to weaken below 100 in the coming months. That’s bullish for emerging markets and commodities.

Historically, a weak dollar plays out in two ways:

2016–2018: U.S. equities performed well alongside a weak dollar.

2000–2008: The dollar weakened, but U.S. equities underperformed while EMs and Europe outperformed.

Lately, we’re seeing signs of the second scenario—Europe, China, and India holding up better than the U.S. If this persists, capital may rotate out of the U.S. into other markets.

We need to watch tax policies and other developments, but for now, the setup favors non-U.S. markets.

What’s your take on interest rates? Could tariffs push inflation higher, preventing rate cuts? What does the bond yields chart tell you?

While tariffs could add inflationary pressure, bond markets aren’t reflecting that yet.

For India, a stronger rupee—thanks to a weaker dollar—provides a cushion against price increases. Since most tariffs are external, they primarily impact U.S. prices rather than Indian inflation.

India’s falling bond yields suggest a continued trend of lower interest rates, aligning with global rate cuts (except Japan). The U.S. might struggle to cut rates further, but even its 10-year bond yields are easing, driven by expectations of smaller deficits due to spending cuts and tariff revenues.

This easing in U.S. bond markets indirectly reduces pressure on other markets, including India. So, India’s rate-cut trajectory remains intact, while the U.S. faces a trickier path due to inflation concerns.

What’s your outlook on the Nifty?

Technically, key downside levels to watch are the 40-day moving average (~23,090) and a worst-case support at 22,930. Holding these levels, the next upmove targets a 61 percent retracement of the recent fall since the late September peak—taking us to around 24,630, over 1,000 points higher.

Once we reach that level, the market may pause and consolidate, but for now, the technical case supports an upside move toward 24,600.

What do the charts say about pharma? Some fund managers believe earnings growth is already priced in.

The weekly charts show positive momentum, but the monthly charts hint at a potential consolidation phase before another rally. Near-term, the Nifty Pharma Index could retest 23,600, but if it doesn’t break higher, expect a range-bound phase for another six months. Longer-term, the pharma uptrend remains intact.

How do EMS stocks look technically?

They’ve seen a sharp pullback, but the broader uptrend remains intact. If they hold key levels this week, a fresh rally could begin.

What do the charts say for IT stocks?

IT has become a defensive sector, which means it often underperforms growth-oriented segments. The Nifty IT index has fallen sharply—from nearly 46,000 to 35,000—which could indicate an oversold condition. If US markets find a bottom, IT could see a near-term rebound.