Nifty slides, IT crashes 8%: SBI Securities on what to expect if 200-EMA fails to hold

The benchmark Nifty 50 slumped 2.65% last week, giving up more than 60% of the gains earned over the previous three weeks, as bearish momentum deepened across sectors. 

The index dropped nearly 800 points in seven trading sessions, its longest losing streak since March 2025. The biggest drag came from the Nifty IT index, which plunged nearly 8% following aggressive policy announcements from U.S. President Donald Trump.

Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, says the market’s sharp reversal has significantly weakened the short-term structure and suggests further downside if key support levels break.

The Nifty’s breach of the 20-day, 50-day, and 100-day EMAs—all now trending downward—signals a shift in sentiment. Shah highlights that the daily RSI has broken below its rising channel and dropped under the 40 mark, indicating a loss of momentum and growing downside risk.

From here, the 200-day EMA zone of 24,400–24,350 becomes the last line of defence. A decisive break below 24,350 could trigger a deeper correction toward the 24,000 mark. On the upside, Shah notes that resistance has shifted lower to 24,850–24,900, and any recovery will likely stall here unless strong buying emerges.

Bank Nifty Outlook:
Bank Nifty also declined nearly 2%, closing below 54,400. From its recent swing high of 55,835, the index has dropped over 1,400 points, forming a sizeable bearish candle on the weekly chart. Shah notes that the index has also breached its key EMAs, and the daily RSI is nearing sub-40 levels, showing deteriorating strength.

Support now lies at 53,800–53,700. A sustained breakdown below this could see the index retesting 53,000. Resistance has moved lower to the 54,700–54,800 zone, which now becomes the first barrier for any potential rebound.

Sensex Outlook:
The Sensex dropped 2.69%, ending the week below the 80,500 mark. Shah observes that the index is now approaching its 200-day EMA support at 80,100–80,000, with bearish sentiment confirmed by the RSI falling below 40. A breakdown here could open the door to 79,300, while resistance remains at 80,900–81,000.

Shah notes that October has historically been a mixed month. In the past 18 years, Nifty ended positive on 13 occasions (avg. +4%) and negative on five (avg. -11.48%), with an overall average return of -0.30% and 10.4% average volatility.

Sectors to Watch:
Shah remains cautious on Nifty IT, which broke below its 200-week EMA and has weak RSI readings. He expects continued pressure on Pharma, FMCG, Financial Services, Healthcare, and Media.

Technically strong picks amid the weakness include L&T, Ashok Leyland, NAM India, and Hindustan Petroleum, according to Shah.