Stock market sell-off: Nifty, Sensex log 8th straight weekly loss; key levels & top triggers now

Indian equity benchmark indices logged an eighth straight weekly loss, their longest losing streak in 25 years, as sustained foreign institutional investor selling, elevated US bond yields and higher crude oil prices hurt sentiment. FII selling, Brent crude at the $100-a-barrel mark and a sharp rise in global yields pushed investors away from riskier assets such as Indian equities.

In the holiday-truncated week, the Nifty50 fell 3.1 per cent and the BSE Sensex declined 2.7 per cent. Their losses over the past eight weeks widened to 8.7 per cent and 8.4 per cent, respectively, underlining the pressure on Indian equities. They settled at 22,421.95 and 71,909.70, respectively.

Persistent foreign selling and elevated US Treasury yields continued to weigh on market sentiment, keeping the broader tone risk-averse. The renewed rise in crude oil prices, along with weakness in the Indian rupee amid sustained foreign selling, added to the pressure, said Ajit Mishra, SVP of Research at Religare Broking.

Brent crude continued to hover above $100 a barrel, adding to market concerns. At the same time, the yield on the US 10-year Treasury note rose to its highest level since mid-June 2007, reducing the appeal of emerging market assets, including Indian equities, for overseas investors.

Indian equities are likely to stay under pressure in the near term as a record global bond rout, renewed strength in crude and the heaviest foreign selling in six months weigh on sentiment, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. A sustained recovery is unlikely until global yields stabilise, crude eases and foreign outflows moderate, he said.

The Reserve Bank of India is expected to raise interest rates by 25 basis points to 5.50 per cent on 7 October, according to a Reuters poll. If it goes ahead, it would be the first increase since 2023. The Indian rupee hit a two-month low, while the benchmark 10-year bond yield climbed to its highest level in more than two years.

Overall, Indian equities remained under pressure through the week as foreign selling, firm crude prices, rising global yields, a weaker rupee and expectations of a rate increase combined to produce the market's longest weekly losing run in a quarter of a century.  

FIIs & DIIs flows Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 9,484.22 crore on Thursday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 10,041.84 crore on a net-net basis. In the last one week, FIIs have dumped local equities worth Rs 35,000 crore.

FIIs stepped up selling through the week, while steady DII buying absorbed much of the outflow, cushioning but not arresting the decline. Broader markets fell as much as frontline indices, while heavy IPO issuance drew liquidity away from listed equities, said Vinod Nair, Head of Research at Geojit Investments.  

Nifty50, Sensex & India VIX outlook The market consistently faced selling pressure at higher levels during the week. It formed a long bearish candle on the weekly charts, while it continued to make lower highs and lower lows on the intraday charts, indicating a largely negative trend. “We believe the market’s short-term texture is weak but oversold,” said Amol Athawale, VP of Technical Research at Kotak Securities.

The possibility of a pullback rally from current levels cannot be ruled out. On the downside, 22,200/71,300 is a key support zone, while 22,500/72,200 is an immediate resistance level. A move above 22,500/72,200 could extend the pullback to 22,700–22,800/73,000–73,200. Conversely, a break below 22,200/71,300 could accelerate selling pressure and push the market down to 22,000–21,950/71,000–70,700, he added.

Sensex remains below the 50-Day EMA at 75,544.56 and 200-Day EMA at 77,684.60 on the daily charts, while RSI has slipped to 24.55, indicating deeply oversold momentum, said Sachin Gupta, VP of Technical Research at Choice Equity Broking. The broader support zone is placed at 71,000–71,200, while resistance is at 72,300–72,500, he said.

Nifty50 seems to be heading lower. The price action around the 22,200 mark will be crucial to watch, as a break below this will trigger major red flags and could push the index lower, said Axis Direct. “We also expect the gains in the index to be capped as long as we do not see a sustained move above the 23,300 zone,” it added.

The daily RSI has slipped to 23, deep in the oversold zone. On the weekly chart, the RSI is placed at 31 and continues to trend lower. India VIX surged 7.12 per cent to settle at 14.45, reflecting a sharp pickup in nervousness following the recent sell-off, said Om Mehra, Technical Research Analyst at SAMCO Securities.

Nifty Bank outlook Nifty Bank witnessed two-sided momentum, highlighting elevated volatility. It formed a high-wave candle with a small body and larger wicks on both sides on the daily chart, indicating indecision at current levels, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

“On a positional basis, the structure remains weak until sustained follow-up buying emerges. Nifty Bank's fall keeps the near-term trend cautious. Going forward, 54,100–54,000 could act as support; a break below this zone could extend selling pressure towards 53,500. On the upside, 55,100–55,200 could act as an immediate hurdle,” he added.

Bank Nifty formed a high-wave candle with a small real body and long shadows in either direction, highlighting intraday volatility. Going ahead, a follow-through pullback will signal an extension of the pullback towards 55,600 and 56,000 levels in the coming sessions, being the recent breakdown area, said Bajaj Broking.

“Failure to move above Thursday’s high will signal some consolidation in the range of 53,500–55,100 levels in the coming sessions ahead of the RBI monetary policy outcome during next week. The index has key short-term support at 53,500–53,000, being the confluence of the previous major lows and measuring implication of the recent range breakdown,” it said.