The Nifty ended Friday at 23,398.10, down 79.70 points, or 0.34%, while the BSE Sensex closed at 74,781.76, down 120.83 points, or 0.16%.
The Nifty touched a three-month low during the week, extending the weakness in the broader market. The Nifty Bank fell for a third consecutive week, while the Nifty Midcap index declined for the second straight week. The Nifty SmallCap index also slipped after three consecutive weeks of gains. Among sectors, Nifty Realty was the biggest loser, while healthcare and pharma were among the better-performing sectors.
Fed decision in focus
The US Federal Reserve’s interest rate decision and FOMC Economic Projections, due on Wednesday, September 16, at 2:00 PM EDT, or 11:30 PM IST, will be the key global trigger for markets.
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Markets are pricing in a high probability of a 25-basis-point rate hike following the recent inflation data. The September 11 report showed headline CPI rising 0.4% month-on-month and holding at 3.4% annually. Core inflation rose 0.3% from the previous month but eased to 2.4% year-on-year.
According to Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, the September 15–16 FOMC meeting will be the week’s principal global catalyst.“A rate hike accompanied by hawkish economic projections could strengthen the dollar, tighten global financial conditions and place further pressure on emerging-market equities, foreign flows and the rupee,” he said.
An unchanged policy rate, or a rate hike accompanied by balanced forward guidance, could trigger a relief rally if investors view the outcome as less restrictive than expected.
The Bank of England and Bank of Japan will also announce policy decisions during the week, adding to the focus on global monetary policy.
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Crude remains a key variableCrude oil has emerged as another major pressure point for Indian equities, with Brent settling at $104.61 a barrel after briefly approaching $110.
Vinod Nair, Head of Research at Geojit Investments, said crude remaining above $100 a barrel amid continued hostilities and retaliatory action in West Asia remained a central factor driving sentiment.
“Crude sustaining above the USD 100 per barrel mark, on continued hostilities and retaliatory action in West Asia, remained the central variable through the week,” Nair said.
He also pointed to rising global bond yields, expectations of synchronised monetary tightening and concerns over a potential unwinding of yen-funded carry trades as factors weighing on risk appetite and emerging-market flows.
For India, a further rise in crude could add to inflationary pressures, widen the import bill, weigh on the rupee and squeeze corporate margins, Radhakrishnan said.
“Any renewed rise in crude, particularly if disruptions to Middle East oil flows intensify, could add to inflationary pressures, widen the import bill, weigh on the rupee and squeeze corporate margins,” he said.
Domestic data, including WPI inflation and trade figures, will also offer clues on how much of the external pressure is filtering through to the economy.
Defensive sectors find favour
The week saw sectoral rotation, with healthcare and pharma leading gains, while IT declined amid the higher global rate environment. Real estate corrected as rising yields and funding costs weighed on the sector.
Nair said largecaps lagged the broader market, while the relatively milder correction in mid- and small-caps helped cushion the overall weakness.
“The coming week brings a dense macro calendar, with key releases such as US and domestic inflation prints and policy decisions from both the Fed and the BoJ. These, alongside the trajectory of crude, will set the near-term direction,” Nair said.
He expects elevated energy prices, foreign outflows and geopolitical uncertainty to keep volatility high, although resilient domestic fundamentals and institutional support could attract buying at lower levels.
Nair said the near-term approach should be to book partial profits where valuations are stretched and systematic risk exposure is highest, while redeploying capital into defensive and deep-value segments.
Nifty’s 23,000-23,300 zone in focusThe Nifty’s technical structure remains fragile, according to Radhakrishnan, with the 23,000–23,300 region emerging as the key support band.
The index remains below its key daily moving averages and has repeatedly tested the 23,300 region since March without decisively breaking below it. The 23,000 level has also continued to attract buying interest.
“The market’s technical structure remains fragile,” Radhakrishnan said.
On the weekly chart, the Nifty has reached its lower Bollinger Band, while weekly RSI readings for the Nifty and Bank Nifty remain in neutral territory. This suggests the market is under pressure but has yet to reach an extreme oversold condition.
This article has been written by Kumar Gaurav, who is not a SEBI-registered Research Analyst or an Investment Adviser. Gaurav and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.