Can Indian stock market crash further? Here’s how to trade next week

Indian stock market: The Indian stock market closed sharply lower last week, breaking a two-week winning streak, as global trade tensions escalated following Donald Trump's tariff increases, unsettling investors both domestically and internationally.

The benchmark indices, Sensex and Nifty 50, were weighed down mainly by weak global cues and renewed fears of a trade war. The Nifty 50 ended the week at 22,904.40, while the Sensex closed near its weekly low at 75,364.69. Over the week, the BSE Sensex plunged 2,050.23 points or 2.64%, and the NSE Nifty dropped 614.8 points or 2.61%.

“After a week-long consolidation phase, Indian equity markets saw a sharp downturn, with benchmark indices slipping over 2.5%, dragged primarily by weak global cues and renewed concerns over a trade war,” said Ajit Mishra – SVP, Research, Religare Broking Ltd., in a weekly note.

Market outlook for the week

Most sectors were hit hard by the decline, with IT and metal stocks taking the biggest hit, dropping between 7% and 9%. However, certain segments like FMCG, banking, and financial services remained relatively stable, helping to somewhat cushion the overall fall. The broader market followed a similar pattern, as mid- and small-cap indices lost between 2% and 2.6%.

Investor confidence took a hit following the United States' decision to impose reciprocal tariffs, which prompted retaliatory actions from other countries and sparked concerns over a potential global trade war. The sharp downturn in U.S. markets further weakened expectations of a rebound.

To make matters worse, foreign institutional investors (FIIs), who had momentarily turned net buyers, resumed selling, intensifying the overall bearish sentiment.

Key market drivers for next week

The upcoming week is crucial as several major domestic and global events on the horizon. Rising tariff tensions are drawing the attention of global investors, who will be closely monitoring any new developments.

On the domestic front, all eyes will be on the Monetary Policy Committee (MPC) meeting outcome scheduled for April 9. This will be followed by key macroeconomic data releases—the Index of Industrial Production (IIP) and Consumer Price Index (CPI) figures—on April 11.

Adding to the week’s momentum, the Q4 earnings season begins, with IT major TCS set to report its results on April 10. “Market focus is gradually shifting toward the upcoming corporate earnings season. The initial outlook remains subdued, with the risk of further downward revisions to earnings growth, largely due to tepid demand and continued margin pressures,” said Vinod Nair of Geojit Investments Ltd.

Can Indian stock market crash further?

Technically, the Nifty has broken below all major price and moving average supports, indicating potential for further downside.

On the outlook of Nifty, Mishra of Religare Broking said, “The immediate support lies at 22,600, while a decisive breach could open the door towards 22,100. On the upside, any recovery is likely to face stiff resistance in the 23,100–23,400 zone.”

Further, on the Bank Nifty outlook, he added, “Interestingly, the banking index is displaying strength and could continue to outperform. It has immediate support at 50,700, with stronger support around 50,000. If the index breaches 52,800, it may pave the way for fresh highs.”

The divergence between Nifty and the banking index could provide some cushion against an aggressive decline.

How to trade in Indian stock market next week?

Mishra further recommend traders to maintain a “sell on rise” strategy for the index until a clear reversal or a retest of the 22,100 support level occurs.

"As earnings season begins, stock-specific action is likely to dominate, presenting opportunities on both the long and short sides.

Banking and financial stocks continue to display consistent strength and could remain in favor. Meanwhile, traders should navigate the broader market volatility with caution, and consider hedging long positions using index puts," he said.

With uncertainty prevailing, agility and sectoral preference will be key to navigating the choppy waters in the days ahead, Mishra added.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.