Indian equities witnessed a broad-based sell-off on Thursday amid a spike in volatility. According to The Economic Times, the 50-stock Nifty declined 180.10 points or 0.74% to finish at 23,997.55, while the Sensex plunged 582.86 points or 0.75% to settle at 76,913.50. The volatility gauge India VIX ended at 18.46, up 5.86% from the last close, indicating heightened market uncertainty. After marking a low of 22,182 on April 2, the index staged a sharp rebound of more than 2,400 points within just 11 trading sessions, primarily driven by improved global risk sentiment following the US-Iran ceasefire. However, over the last six trading sessions, Nifty has been consolidating within a narrow range of 24,335 to 23,798, reflecting market indecisiveness. The index touched a high of 24,601 on April 21, after which profit booking set in, with the current consolidation phase largely due to multiple factors including rising Brent crude prices, uncertainty around the sustainability of the US-Iran ceasefire, upcoming state election outcomes, and the USD/INR hitting a fresh record low.
Despite India's underperformance in 2025, the country is positioned for a potential rebound in 2026. According to The Economic Times analysis by Vipul Sanghvi, CEO & Co-Head Institutional Equities at Systematix Group, India's underperformance may now be creating the base for the next phase of recovery. The MSCI India Index delivered returns of only around 4% in US dollar terms in 2025, weighed down by currency weakness, slower earnings growth, tariff-related pressures, and relatively higher domestic interest rates. However, foreign investors withdrew nearly USD 35 billion over the last 24 months, bringing foreign ownership in Indian equities to a 15-year low of around 16%. This underperformance may now be creating favorable conditions, as valuations have adjusted, earnings are improving, and multiple catalysts are already in place. The MSCI Emerging Markets Index delivered a total return of 33.6% in 2025, outperforming both the S&P 500 at 17.9% and the MSCI World Index at 21.6%, marking the strongest outperformance of Emerging Markets over US equities in nearly two decades.
According to The Economic Times analysis by Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, the 24,300 to 24,350 zone will act as a key resistance on the upside, with a sustained move above 24,350 potentially triggering a sharp rally towards 24,500, followed by 24,700. On the downside, the 23,800 to 23,750 zone remains crucial support, and a breakdown below 23,750 may lead to further correction towards 23,600 and then 23,400. The derivatives data indicates a phase of consolidation with a cautious undertone, with the PCR for the current expiry at 0.87, reflecting a mild bearish bias but not strong conviction. Bank Nifty appears relatively weaker with choppy futures positioning and comparatively lower PCR, indicating a cautious to slightly bearish stance. Going ahead, we expect heightened volatility in the near term, with the next move from these levels likely to define the trend for the coming weeks.
As reported by The Economic Times, the banking and financial services space has been underperforming over the last couple of trading sessions. According to Sudeep Shah's analysis, considering the current chart structure, banking and financial services are likely to continue their underperformance in the short term, with momentum indicators and oscillators portraying a similar picture. The options data shows slightly heavier call writing and a comparatively lower PCR, indicating a cautious to slightly bearish stance for the banking sector. This weakness in banking stocks persists, with banks, auto and consumer stocks turning out to be major drags in the recent sell-off.
According to The Economic Times analysis, the smallcap segment has continued to outperform the broader market during the recent pullback rally, showcasing strong relative strength. The Nifty Smallcap 100 index surged by 18.44% in April, significantly outperforming both large and mid-cap indices. The ratio chart of the Smallcap index versus the Nifty is exhibiting a clear pattern of higher highs and higher lows, indicating sustained relative outperformance. From a technical perspective, the overall structure remains robust with the index trading above key moving averages, while momentum indicators continue to signal strong bullish traction, suggesting that the smallcap segment is likely to maintain its leadership in the near term. Given this backdrop, investors can continue to focus on fundamentally strong stocks within sectors that are already showing relative strength, as these are likely to offer better risk-reward opportunities during the ongoing uptrend.
