D-Street Weekly Outlook: Nifty Under Pressure, Sell-on-Rise Strategy Advised Amid Trade War Fears

Nifty breaks key supports, Bank Nifty holds firm; experts suggest cautious trading, focus on banking stocks and hedging with index puts.

April 7, 2025: The Indian stock market snapped its two-week winning streak with a steep fall last week, as the Nifty 50 and Sensex tumbled over 2.5% each. The decline came on the back of weak global cues, renewed trade war fears, and resumption of FII selling.

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The Nifty 50 closed at 22,904.45, down 2.61%, while the Sensex slipped 2.65% to finish at 75,364.69, dragged by IT, metals, and global-exposed sectors. The Nifty IT index alone plunged 9.2%, its worst weekly performance in five years, amid recession fears in the US.

📉 What Dragged the Market?

Escalating global tariff tensions, especially between the US and other nations, triggered a fresh risk-off sentiment.
Weak US market performance added fuel to the sell-off.
Foreign institutional investors turned net sellers again, after a brief buying stint.
IT, pharma, metal and energy sectors saw heavy profit-booking.

On the contrary, FMCG and financial stocks showed some resilience. Defensive buying in FMCG helped it rise 0.45% for the week, while Bank Nifty remained largely flat, offering some cushion to broader market weakness.

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🔍 Technical Check: Nifty, Sensex & Bank Nifty

Nifty 50 has broken below key supports including the 21-day and 55-day EMAs, with the RSI now below its 14-day SMA, signaling weakening momentum.
- Immediate support: 22,600
- Crucial support: 22,100
- Resistance zone: 23,100–23,400
Sensex followed a similar trajectory, weighed down by heavyweights across IT and commodities.
Bank Nifty showed strength despite volatility.
- Support: 50,700, then 50,000
- Resistance: 52,000–52,800
- A breakout above 52,800 could trigger fresh highs, say experts.

“The divergence between Nifty and banking index could provide some cushion against an aggressive decline,” said Ajit Mishra, SVP at Religare Broking.

📊 Key Observations:

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Broader markets, including mid and small-caps, dropped 2–2.6% mirroring the benchmark trends.
Pharma stocks, after a brief mid-week rally, reversed sharply due to renewed tariff threats by Trump.
Metals and energy stocks took a beating, dropping over 7.5% and 3.8% respectively.

🧠 Trading Strategy for the Week Ahead

✅ Recommended Approach: Stay Nimble, Trade Selectively

Experts across the board suggest caution, given the lack of clarity and heightened global volatility.

“Maintain a sell-on-rise strategy until a retest or reversal from 22,100 occurs,” said Mishra.

Stock-specific action will dominate as Q4 earnings season begins.
Banking and financials remain the preferred sectors.
Use index puts to hedge long positions in the volatile environment.

“Until the 22,800 level is reclaimed, avoid aggressive longs,” warned Puneet Singhania of Master Trust Group.

⚠️ Bottom Line:

The market is at a crossroads. Global uncertainty, weak technicals, and institutional selling have created a short-term bearish setup. Traders are advised to be nimble, stay light, and avoid over-leveraging. Defensive positioning, selective stock-picking, and clear stop losses are the keys to weathering the storm next week.

Tags:
Nifty 50, Sensex, Indian stock market, Bank Nifty, stock market strategy, trade war, global markets, technical analysis, trading tips, market outlook, FII selling, equity market, stock market news, sectoral trends, recession fears

Misha Bhatia