Domestically, the Reserve Bank of India’s Monetary Policy Committee (MPC) took a dovish turn, cutting the repo rate by 25 basis points to 6.0% and shifting its policy stance from ‘neutral’ to ‘accommodative,’ in line with expectations.
Despite the subdued weekly trend, markets rallied strongly on Friday. The Nifty jumped 429 points (1.92%) to close at 22,828, while the Sensex surged 1,310 points (1.77%) to end at 75,157, after having gained over 1,600 points during intraday trade.
With the market closing with these dynamics, analyst Rahul Ghose, Founder of Hedged.in, interacted with ET Markets, sharing his views and critical levels on the indices:
With Trump’s talk of tariffs, then a pause, and especially targeting China and possibly India, what kind of ripple effect could that have on global risk sentiment and the Indian equity market?
The tariff announcements triggered a global risk-off sentiment, with Indian equities (Nifty/Sensex) plunging 3-5% initially. However, the 90-day pause on April 9 spurred a partial recovery, with Nifty rebounding ~2% to 22,821. Persistent US-China tensions (125% tariffs on China) and India’s 26% tariff exposure will keep markets volatile. A prolonged standoff could pressure export-linked sectors (IT, pharma) and amplify recession risks, though India’s domestic-driven economy may fare better than peers.
What is the general view on the markets after the RBI MPC outcome, given that they changed their stance to ‘accommodative’?
The RBI’s shift to an accommodative stance and back-to-back rate cuts signal proactive growth support, with FY26 CPI projected at 4%. This dovish pivot, coupled with easing crude prices, improves liquidity and consumption prospects, particularly for rate-sensitive sectors (banks, autos). However, global trade uncertainties may limit upside.
Where is Nifty headed now, in your opinion?
Nifty is showing resilience. Every time markets gap down, we see Nifty pulling back up, indicating strength in the Indian equity markets. However, if one takes a rational view looking at the charts, Nifty is trading in a sideways range on daily and weekly time frames and continues to be in an uptrend on the monthly. It is still defending the monthly 20 EMA. Overall, markets are likely to trade with a sideways bias. If there are no negative surprises, one can assume that the short-term bottom of 21,743 on the Nifty spot will hold for some time. However, on the upside, Nifty faces multiple resistances, the first key level being 23,500-23,870. On the downside, 21,281, which is the election low, will continue to be a strong support.
How do you think Bank Nifty is placed right now?
Nifty Bank too is trading in a daily and weekly sideways range. The upper end of the range is 52,260-53,775, and on the lower side, 47,840 and 46,080 are strong support levels. Bank Nifty too is seen defending its monthly 20 EMA, which is bullish. Interestingly, while Nifty is trading way below its 200 DEMA, Bank Nifty is hovering around its 200 DEMA, indicating relative strength.
Key levels or any strategy?
The best strategy under the current circumstances would be to play the range. On the upside, look to sell around the 23,500 and above area on some bearish confirmations, and on the downside, consider buying around the gap areas of 22,300-22,500 on some bullish confirmations. Alternatively, one can also set up non-directionals like Iron Condor to play the broader range of the markets.
Are there any divergence patterns or technical setups on the daily or weekly charts that traders should be cautious or optimistic about in the broader indices?
Nifty IT (currently 32,740) charts are looking bearish for lower targets. The April month is showing signs of convincingly closing below the 20 EMA, and in all probability, could hit the lower end of the monthly BB placed at 29,000. IT is one sector that traders should be cautious about in the short term. On the other hand, Nifty FMCG looks convincingly bullish and can show considerable outperformance in the upcoming months. The FMCG index is forming a strong bullish candle at the lower end of the Bollinger band on the monthly chart and has also crossed the prior monthly high of 54,150. The current weekly chart has closed as a Bullish Marubozu candle, suggesting strong buying in the overall FMCG index.
I would like to know your opinion on the market. With all the volatility, is it really a market where traders can take positions? As I see it, a trader just cannot afford to carry overnight positions, with such gap-ups one day and gap-downs on the other.
Correct. The current volatility makes it impossible to take directional futures bets, and they are not recommended. The best way to play this market is through options due to their downside protection. Trades should have hedged positions at all times, preferably credit spreads, as volatility levels in certain stocks are extremely elevated.
We’ve seen consistent FII selling again recently. How is that impacting market sentiment and derivatives positioning, particularly in index futures and options? Do you see it ending soon? Do the FIIs have any reasons to return to us?
FIIs have net sold ₹38,000 crore in April, driving elevated put/call ratios (1.2+) and steep futures discounts. Sustained selling may persist until US-China tensions ease. Re-entry is likely to hinge on tariff stability and INR stability aided by RBI rate cuts.
What is your opinion on the IT sector now that TCS reported below-than-expected Q4 results?
As mentioned earlier, the IT sector is looking concerned and may see further downside. Investors should have a wait-and-watch approach. Avoid doing lumpsum investments, as one may get the stocks at 15-20% below the current levels. The SIP approach to entering IT stocks will be the best, as notwithstanding near-term uncertainties, the long-term outlook looks promising due to the GenAI deal pipeline.
Which sectors are showing relative strength or weakness on the charts that are particularly noteworthy? And how can traders use that to their advantage in the short to medium term?
Relative strength: FMCG (Nestlé, HUL up 4-6%) – should be considered for potential long positions. Relative weakness: IT, metals, PSU banks. Should be on the radar for potential shorts on rallies.
Which specific stocks are showing strong breakout or breakdown patterns from a technical standpoint and look promising for short-term trades?
Asian Paints looks promising. A break and close above 2,420 could propel the stock to newer highs of 2,600/2,700 levels in the short to medium term. Kotak Bank looks poised for a breakout and could soon reach all-time high levels, based on the overall chart structures.
How do you see the global macro narrative—especially from the US situation and Fed policy—playing into India’s F&O space over the next quarter?
US recession fears and Fed rate-cut delays may spur defensive F&O strategies (put buying, low-beta longs like FMCG stocks). Monitoring US 10-year yields and DXY for directional cues will be extremely crucial for traders.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
