The Nifty 50 faces a crucial test at the 23,800 support level next week, with technical analysts warning that failure to defend this level could trigger further selling pressure. According to Moneycontrol, the index closed at 23,998 on Thursday, down 180 points (0.74%) but managed to gain 0.4% for the week and rally 7.46% for April month. The index formed a Doji-like candlestick pattern on both daily and weekly charts, indicating indecision among bulls and bears. Nilesh Jain from Centrum Finverse noted that the index found strong support at its 21-DMA placed around 23,800, stating that as long as it holds above this level, the pullback is likely to continue. However, weekly options data indicate the Nifty 50 is likely to trade in the 23,500–24,500 range in the short term, with 24,000 expected to be a crucial zone for further direction.
Oil prices have surged well above $110 per barrel, with Brent crude futures trading at around $111 per barrel and WTI Crude futures hovering around $105 per barrel. As reported by The Economic Times, fresh escalations in the Iran war pushed oil prices to as high as $126 per barrel this week, before cooling off slightly. Spiking oil prices above $110 a barrel, amid escalating US-Iran tensions and continued disruption of oil supply through the Strait of Hormuz, are intensifying inflation concerns and fears of a widening deficit. Growth worries, a depreciating rupee against the US dollar, and persistent FII outflows have also contributed to selling pressure in the market. The volatility index, India VIX, spiked 5.86% on Thursday to 18.46 after a three-day decline but managed to settle below short- and medium-term moving averages, signalling some discomfort for bulls.
The Bank Nifty declined 2.2% for the week and closed below the previous week's low, forming a long bearish candle with minor wicks on both sides. According to SBI Securities, the immediate support for Bank Nifty is placed in the 54,400–54,300 zone, with any sustained move below this zone potentially extending weakness towards 53,900, followed by 53,500 in the short term. On the upside, the 55,400–55,500 zone is likely to act as immediate resistance. The banking index fell 540 points (0.98%) to close below the 55,000 level at 54,863, with the Bank Nifty falling below the 38.2% Fibonacci retracement level (of the April rally) intraday before showing recovery of more than 400 points. Despite weekly weakness, the Bank Nifty surged 9.1% for April month, following a 17% correction in March.
According to The Economic Times, exit polls across four states and one union territory indicate a maiden electoral win for the Bharatiya Janata Party (BJP) in West Bengal, while incumbents are likely to retain power in Tamil Nadu, Assam and Puducherry. Kerala also appears set for a regime change, with the Congress-led United Democratic Front (UDF) likely to unseat the Left Democratic Front (LDF), which has ruled the state for the last 10 years. However, Kotak Institutional Equities warns that any election-driven market rally may be short-lived, as rising oil prices and a widening deficit pose bigger risks. The brokerage expects policymakers to use the 10-month election-free corridor to address a weakening macro environment characterized by elevated crude oil prices, a widening current account deficit (CAD), and risks to food inflation.
According to Mint, experts suggest that volatility will likely remain a key feature of the market amid mixed signals around the US-Iran war, with a decisive end potentially sparking a sharp rally. "If crude stays elevated for longer, the upside in indices may remain capped, and sectors dependent on imported raw materials could see pressure. However, a meaningful de-escalation in West Asia can trigger a sharp relief rally, as positioning has already turned cautious," said Dasani. Market experts recommend a "buy on dips, sell on rallies" approach, emphasizing the need to closely track global developments and stay nimble with positions in the short to medium term. While the broader outlook is not bearish, investors should expect a wider trading range instead of a one-way rally. Technical analysts expect the market to remain cautious next week, with weakening momentum indicators and a lack of directional conviction continuing to influence trading patterns.
