Indian Stocks Plunge Amid Global Uncertainty

Market Sees Broad Sell-off, Pharma and Healthcare Among Top Losers

Indian equities extended their downturn for a second consecutive session on Friday, with the benchmark Nifty 50 index breaching critical support levels. Investors grappled with ongoing concerns over international trade dynamics and significant foreign institutional investor (FII) outflows, painting a cautious picture for the market’s immediate future.

Sectoral Weakness and Market Breadth Deteriorate

The broader market experienced a significant sell-off, with Nifty Pharma and Healthcare indices mirroring the general decline. Particularly hard hit were the Nifty Media, PSU Banks, Oil & Gas, and Metal sectors, which registered steep losses. The situation was more severe in the mid and small-cap segments, with the Nifty Midcap 100 index dropping 1.61% and the Nifty Smallcap 100 index plummeting 2.10%. This marked the seventh consecutive day of weak market breadth, indicating a prevailing bearish sentiment among investors.

Analyst Outlook Points to Consolidation

Market watchers anticipate a period of consolidation as uncertainties persist. Siddhartha Khemka, Head of Research — Wealth Management at Motilal Oswal, commented on the market’s outlook, stating, “We expect the market to remain in consolidation mode amid continued uncertainty around the India-US trade deal, a mixed Q1FY26 earnings season so far, and intensifying FII outflows.” Key corporate results scheduled for the weekend include those from Kotak Mahindra Bank, Macrotech Developers, and CDSL.

Technical Indicators Signal Bearish Reversal

Technical analysis suggests a shift in momentum favouring bears. Rajesh Bhosale, Equity Technical Analyst at Angel One, observed a deterioration in the chart structure for bulls. He noted, “The chart structure has deteriorated for the bulls. On the daily chart, the Nifty 50 had been trading within a “Rising Channel” pattern since May. However, this week’s breakdown below the channel’s lower boundary confirms a bearish reversal.” Bhosale added that the index has fallen below its 50-day Exponential Moving Average (DEMA), a level previously acting as robust support, signalling a significant change in short-term momentum. Indicators like the RSI Smoothened slipping below 39, a level not seen since April’s swing lows, further reinforce this weakening trend, potentially pointing towards the 200-day Simple Moving Average (SMA) in the 24,200–24,000 zone.

“The chart structure has deteriorated for the bulls. On the daily chart, the Nifty 50 had been trading within a “Rising Channel” pattern since May. However, this week’s breakdown below the channel’s lower boundary confirms a bearish reversal.”

—Rajesh Bhosale, Equity Technical Analyst, Angel One

Bank Nifty Faces Key Support Test

The Bank Nifty index also continued its downward trajectory, with daily charts showing a weak candle pattern. The index is approaching a critical retest of its 50-DEMA zone near the 56,000 level. Sustaining this support is crucial for maintaining the current bias, as a breach could trigger further declines. On the upside, breaking decisively above the 57,300 resistance level would be necessary to signal a fresh upward movement and strengthen the trend.

Expert Recommendations for Intraday Trading

Despite the broad market weakness, several analysts have identified potential intraday trading opportunities. Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher; Mehul Kothari, Deputy Vice President — Technical Research at Anand Rathi; Sugandha Sachdeva, Founder of SS WealthStreet; and Anshul Jain, Head of Research at Lakshmishree Investment, have put forth specific stock recommendations. Their picks for intraday trading include Bodal Chemicals, IOB, Hazoor Multi Projects, and DCW.

Vaishali Parekh’s Pick: Bodal Chemicals

Bodal Chemicals: Recommended Buy at ₹74.40, with a target of ₹78 and a stop loss at ₹72.

Mehul Kothari’s Recommendation: IOB

IOB: Advised to buy between ₹37 to ₹38, setting a target of ₹42 and a stop loss at ₹36.

Sugandha Sachdeva’s Top Trade: Hazoor Multi Projects

Hazoor Multi Projects: Suggested Buy at ₹39.50, with targets at ₹41.70 and ₹42.50, and a stop loss of ₹38.50.

Anshul Jain’s Stock Choice: DCW

DCW: Recommended Buy at ₹79, aiming for a target of ₹85 and maintaining a stop loss at ₹75.

The Indian stock market’s recent performance reflects global economic undercurrents. For instance, a recent report by the International Monetary Fund (IMF) in April 2024 highlighted a projected global growth of 3.2% for 2024, indicating a stable but not robust economic environment, which often translates to cautious investor sentiment in emerging markets like India (IMF, 2024).