Indices heading for temporary weakness

Mumbai: In the last session of the week, the benchmark indices witnessed profit booking at higher levels, the Sensex was up by 660 points. Among sectors, the IT index outperformed, gaining 6.4 percent, while the Tourism and Media indices shed over 2 percent. During the week, the market continued its positive momentum but corrected sharply last Friday.

Technically, the Nifty and Sensex breached the 79,300 support zone and slipped below the 200-day SMA (Simple Moving Average). Additionally, a reversal formation on daily charts and a shooting star candlestick formation on weekly charts indicate temporary weakness.

Amol Athawale of Kotak Securities, said: “We believe that as long as the market is trading below 79,300, the correction wave is likely to continue.” On the downside, the market could slip to 78,500, and further downside may drag the index down to 78,200. Conversely, a breach above 79,300 could change market sentiment. If the market surpasses this level, it could rally to 80,200-80,500.

Vaibhav Vidwani, Research Analyst, Bonanza, said: “The Indian stock market closed sharply lower amid escalating geopolitical tensions and mixed corporate earnings. The Sensex fell by 588 points (0.74%) to close at 79,212, while the Nifty 50 dropped 207 points (0.86%) to settle near the crucial 24,039 mark.

The key driver of the downside was the spike in India-Pakistan tensions following the Pahalgam terror attack, which led to retaliatory firing along the Line of Control and the suspension of the Indus Water Treaty by India. This heightened geopolitical risk spooked investors, especially ahead of the weekend, triggering broad-based selling. The volatility index surged 6%, reflecting increased investor fear.

Small and midcap stocks were hit hardest, with the BSE Smallcap and Midcap indices fall signaling concerns over stretched valuations in these segments. Despite the overall weakness, IT stocks outperformed, providing some relief.