The market’s downward trajectory follows a two-week winning streak that came to an end last week
The Indian stock market began the week on a weaker note, as the benchmark indices BSE Sensex and Nifty50 struggled amid an uncertain outlook. At the time of writing, the BSE Sensex was trading lower by 175.42 points, or 0.23 percent, at 75,763.79. Simultaneously, the Nifty50 slipped by 49.80 points, or 0.22 percent, to trade at 22,879.45.
The market’s downward trajectory follows a two-week winning streak that came to an end last week. The BSE Sensex closed the previous week with a steep decline of 2.5 percent, shedding 1,921 points to settle at 75,939. The Nifty50, in parallel, fell by 2.7 percent, reaching an eight-month low of 22,775 before closing the week at 22,929. With the indices showing signs of weakness, traders and investors are closely monitoring technical indicators to determine whether the market is poised for further losses or if a recovery is on the horizon.
Smallcap Stocks Under Pressure
Smallcap stocks have borne the brunt of selling pressure over recent months, pushing key indices into a bear market phase. The Nifty SmallCap 100 index, which achieved an all-time high of 19,716 on December 12, 2024, has since witnessed a significant decline of 23.7 percent, falling to a low of 15,044 in intra-day trading on Monday. Similarly, the Nifty SmallCap 250 index has recorded a sharp 24 percent drop from its peak on September 27, 2024, hitting a low of 14,145.
The sustained fall in smallcap indices is raising concerns about a potential capitulation phase, where investors may rush to exit positions, further amplifying the sell-off. Analysts suggest that investor sentiment is shifting toward capital preservation, with a preference for safer and more stable investment options. The aggressive decline in smallcap stocks is forcing market participants to re-evaluate portfolio allocations and shift toward large-cap stocks and defensive sectors to mitigate risk.
Technical Analysis and Market Indicators
Technical indicators for the Sensex and Nifty50 suggest a continuation of the prevailing downtrend unless key support levels hold firm. The Sensex recently tested a low of 75,338, while the Nifty50 touched 22,775, marking their lowest levels in months. Chart patterns indicate that any failure to sustain these levels could trigger further downside, while a decisive recovery above last week’s closing levels may pave the way for a potential rebound.
Momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are signaling a weak sentiment, reflecting increased volatility. Additionally, foreign institutional investors (FIIs) have shown a reduced appetite for equities, further weighing down market performance. Traders are watching support and resistance zones closely, as breaking below key levels may invite further selling pressure, while a strong reversal could signal a recovery.
IPO Market Activity and Listings
Despite the weakness in secondary markets, activity in the primary market remains vibrant. In the mainline IPO segment, Ajax Engineering made its market debut with a 6 percent discount on the BSE, disappointing investors who had anticipated a stronger listing. Meanwhile, the basis of allotment for Hexaware Technologies IPO is set to be finalized today, providing clarity on investor participation levels.
The Quality Power Electrical Equipments IPO is progressing into its second day of the subscription window, attracting attention from retail and institutional investors. In the SME IPO segment, Chandan Healthcare is set to list on the exchanges, while several other IPOs, including PS Raj Steels, Voler Car, and Maxvolt Energy Industries, are finalizing their basis of allotment.
Additionally, the last day of subscription has arrived for the IPOs of Shanmuga Hospital and L.K. Mehta Polymers, while Tejas Cargo India and Royalarc Electrodes are witnessing the second day of their subscription process. The IPO market’s steady stream of activity demonstrates sustained interest in new listings, even amid broader market corrections.
Sectoral Performance and Key Trends
Sectoral performance remains mixed, with defensive sectors such as pharmaceuticals, FMCG, and utilities exhibiting resilience in contrast to the broader market weakness. Banking and financial services stocks have faced moderate declines, tracking the overall negative sentiment in the markets. Meanwhile, IT and technology stocks continue to struggle under pressure from global economic headwinds and declining demand from overseas markets.
The energy sector remains under focus, with oil and gas companies witnessing volatility driven by fluctuations in global crude oil prices. Metal stocks, which had been strong performers in recent months, have also faced selling pressure as concerns over global demand and commodity price trends weigh on the sector.
Investor Sentiment and Market Outlook
Investor sentiment remains cautious as global macroeconomic factors, including inflation trends and central bank policies, continue to influence market direction. The recent pullback in Indian equities aligns with a broader risk-off sentiment observed across global markets, driven by economic slowdown concerns and geopolitical uncertainties.
While market volatility persists, some analysts believe that current corrections present buying opportunities for long-term investors. Fundamentally strong companies in the large-cap segment, along with defensive stocks in sectors such as healthcare, FMCG, and infrastructure, are likely to remain attractive during periods of uncertainty.
For market participants, upcoming economic data releases, corporate earnings reports, and global market cues will play a crucial role in determining near-term trends. With key support and resistance levels being tested, traders and investors must exercise caution while navigating the market in the coming days.
The stock market opened the week on a subdued note, with the BSE Sensex and Nifty50 extending losses amid an uncertain outlook. Smallcap stocks have faced intensified selling pressure, with key indices slipping into a bear phase. Technical indicators suggest a cautious approach, as markets seek clarity on potential reversals or further declines.
Despite weak market performance, IPO activity continues to generate interest, with several new listings in both mainline and SME segments. Sectoral trends indicate resilience in defensive sectors, while banking, IT, and metal stocks experience heightened volatility.
Going forward, investor focus remains on technical support levels, global economic cues, and central bank policies. While market sentiment remains cautious, long-term investors may find selective opportunities in fundamentally strong stocks. Careful market navigation and strategic allocation will be essential in managing risks and capitalizing on potential market movements.
