Sensex, Nifty outlook for Monday, March 23: What to expect from stock market? Key levels, trading strategy & more

Domestic equity market ended the week on a subdued note, with a slight negative bias, amid a depreciating rupee, West Asia tensions, foreign outflows and rising crude prices. 

On Friday, Sensex rose 325.72 points, or 0.44 per cent, to settle at 74,532.96. The Nifty gained 112.35 points, or 0.49 per cent, to close at 23,114.50. 

Both benchmarks climbed in four of five sessions this week. Nifty futures on the NSE International Exchange were down 291 points, or 1.26%, to trade at 22,845.5, hinting at a negative opening on Monday.

The domestic indices suffered a sharp fall, eroding around Rs 6.53 lakh crore in early trade. Investor wealth, as reflected in the BSE’s market cap, plunged to Rs 432.10 lakh crore, down from Rs 438.63 lakh crore recorded in the previous session.

BSE market cap declined by about Rs 0.6 lakh crore during the week. The total market capitalisation of BSE-listed firms slipped to Rs 428.76 lakh crore from Rs 429.39 lakh crore as of March 13. 

Ajit Mishra, SVP of Research at Religare Broking Ltd, said the initial positivity early in the week was wiped out by a sharp drop on Thursday, followed by a turbulent final session.

Crude oil amid geopolitical tensions

Ponmudi R, CEO of Enrich Money, observed that the Indian equity markets experienced a highly volatile yet stabilizing week, where short-term relief followed an earlier sharp correction. 

“While geopolitical tensions in the Middle East continued to remain elevated, some moderation in crude oil prices helped limit further downside, enabling indices to consolidate near key support zones,” Ponmudi said.

Ponmudi said concerns were further amplified by ongoing disruptions around the Strait of Hormuz alongside attacks on energy infrastructure across the region, further heightening global uncertainty. “Brent crude moved toward the $108–$112 range, with intraday spikes nearing $119, before witnessing some pullback.”

FIIs and DIIs

Foreign institutional investors (FIIs) remained net sellers throughout the week. Hariprasad K, SEBI-registered research analyst and founder of Livelong Wealth, noted that FII outflows in the cash segment approached Rs 29,900 crore over the week. While domestic institutional investors (DIIs) absorbed the selling pressure with net inflows surpassing Rs 30,600 crore. 

FIIs “with cumulative outflows in March reaching approximately Rs 86,700+ crore, including a notable single-day sell-off of around Rs 9,365 crore on March 16,” Ponmudi said.
“Financial services are doing well and their valuations are fair. Despite this, FPIs sold massively in this sector because this sector accounts for about 32 % of the Assets Under Custody of the FPIs,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Key levels to watch

Hariprasad pointed out that the steep 300-point discount to the Nifty spot signals fragile sentiment, with downside risks likely taking center stage early next week unless a strong positive trigger emerges.

Nifty 50: Analysts believe the 23,000 level stands as a crucial psychological and structural support. Hariprasad warned that a "decisive breach below the 22,900–22,950 zone could open the door for a deeper correction towards the 22,000 region". On the upside, Hariprasad, Mishra and Ponmudi echoed 24,000 as the key resistance level.

Bank Nifty: The banking index is underperforming, weighed down by sustained FII selling and profit booking in financials. “It is currently hovering around a critical support zone near the 100 WEMA. Immediate support is seen in the 52,300–52,500 range, while resistance is placed near 54,800, with a stronger hurdle at 55,700,” Mishra said.

Sensex: Analysts believe the 74,000 mark remains a key structural support, aligned with previous demand zones. “On the upside, 75,500 remains an immediate resistance, while 77,000 continues to act as a major supply zone,” Ponmudi said.

Trading strategy

Mishra noted that pharmaceutical and select energy stocks will continue to attract interest, while metals may benefit from cyclical support. “However, caution is advised in rate-sensitive and oil-linked sectors given elevated crude prices,” he said.

Mishra advised “traders should remain nimble, avoid aggressive leverage, and adhere to disciplined risk management practices. With volatility expected to remain high, maintaining a hedged approach with a focus on stock selection will be key until clearer directional cues emerge.”