India's Market Outlook Hinges on Ceasefire or Escalation

Indian Stocks Struggle Amid Geopolitical Tensions and Weak Global Trends

The Indian stock market had a tough week, with the Nifty50 falling 0.46 percent for the sixth week in a row. The market was affected by ongoing geopolitical tensions, high oil prices, weak global trends, and continued selling by foreign investors, which have hurt sentiment for over a month. However, gains in IT, metals, defense stocks, and a strong recovery in the rupee later in the week helped limit losses.

Rupee Rebounds After Reaching Record Low

The rupee breached the psychologically significant 95-mark against the US dollar for the first time in its history, touching a record low of 95.12 on Monday. However, the Reserve Bank of India moved to curb speculative pressure by imposing limits on non-deliverable forward positions, reining in offshore derivative activity that had been weighing on the currency. By Friday, the currency had staged a sharp recovery, posting its sharpest single-session gain in over twelve years. For the full week, the rupee closed 171 paise stronger at 93.10, snapping a four-week losing streak.

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Institutional Flows Remain Weak

On the institutional flows front, there was little comfort. FIIs extended their selling streak to a seventh consecutive week, offloading equities worth Rs 29,425 crore.

Sectoral Performance

Sectorally, healthcare and pharma bore the brunt of the selloff, shedding over 3 percent each. Consumer durables, PSU banks, private banks, and the auto sector each declined by around 1 percent. IT, metals, and the India Defence index stood out as clear outperformers, each gaining between 2 and 3 percent during the week.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Midcap and Smallcap Performance

The midcap index ended the week down 0.5 percent, though the smallcap space managed a gain of nearly 1 percent.

Global Markets Remain Volatile

Globally, the picture remained mixed. Major US indices closed a volatile, holiday-shortened week in positive territory, lifted by tentative signs of a de-escalation of conflict in the Middle East. However, a missing US airline pilot and presidential threats of a retaliatory strike within 48 hours have injected fresh uncertainty into the outlook, ensuring that global risk appetite remains fragile and that market volatility is unlikely to subside in the near term.

Technical Analysis

The weekly chart of the Nifty50 has closed 0.47 percent lower at 22,713, reinforcing continued weakness in the broader market. The Relative Momentum Indicator (RMI) has broken down from a crucial support zone and is heading lower, with the potential to reach extreme oversold levels in the coming sessions. Meanwhile, price is trading below the 40-week exponential moving average, reflecting sustained bearish pressure.

However, the index is now approaching a historically significant support zone from where a bounce or short-term reversal could be expected, as the current bearish trend shows signs of temporary exhaustion. The overall trend, though, remains bearish, and any pullback from these levels should be treated with caution unless backed by strong and clear confirmation in price action.

FIIs Net Index Futures Position

FIIs net index futures position currently stands at -2,68,020, and the indicator continues to trace a clear downtrend of lower highs and lower lows. However, what is worth noting is that the pace of decline has moderated meaningfully since the sharp and aggressive selling seen between early and mid-March. Through the latter half of March and into April, the intensity of FII selling has visibly eased.

Weekly RRG

The Weekly Relative Rotation Graph (RRG) shows that Nifty Consumer Durables has recently shifted from the improving to the leading quadrant, exhibiting a strong rise in momentum that makes it one of the more interesting indices to watch for potential outperformance. Nifty Energy, Nifty Pharma, and Nifty Infrastructure are also positioned in the leading quadrant, each showing steady momentum improvement. However, Nifty PSE, Nifty Metals, Nifty MNC, and Nifty Financial Services — while still in the leading quadrant — are experiencing sharp declines in momentum. Should this continue, these indices risk rotating toward the weakening quadrant and underperforming.