Weak Close as Geopolitical Uncertainty and Weak IT Earnings Weigh on Sentiment

Market Overview

After two weeks of gains, markets ended the week lower, influenced by increased geopolitical tensions and disappointing earnings reports from major IT companies. Although benchmarks rose initially, selling pressure dominated most of the week.

The Nifty 50 dropped 1.87% to finish at 23,897.95, and the Sensex declined 2.33%, closing at 76,664.21.

Main Market Influences

Global events continued to significantly impact the markets. Persistent uncertainty regarding the crisis in West Asia, along with concerns about supply chain disruptions, kept crude oil prices high. Brent crude surged roughly 8–10% during the week, surpassing $105 per barrel.

This rise heightened inflation worries, increased India’s import bill, and raised potential concerns about the country’s fiscal health.

Moreover, underwhelming earnings and cautious forecasts from major IT firms, combined with ongoing foreign institutional investor (FII) outflows, negatively affected market sentiment.

Domestically, economic indicators showed mixed results. The Index of Eight Core Industries shrank by 0.4% year-over-year in March 2026, reflecting weakness in key sectors such as fertilizers, crude oil, coal, and electricity.

Moody’s downgraded India’s fiscal year 2027 GDP growth forecast to 6%, citing sluggish consumption, slower industrial growth, and rising energy costs.

However, some high-frequency data suggested stronger business activity. The HSBC Flash Composite PMI rose to 58.3 in April, signaling robust expansion. The Services PMI recorded 57.9, and Manufacturing PMI improved to 55.9, both indicating improving conditions.

Sector Performance

Most sectors declined amid broad risk aversion. The IT sector was the worst performer, dropping more than 10% due to weak earnings and conservative guidance.

The automobile, financial, and real estate sectors also closed lower due to macroeconomic concerns.

Conversely, energy and FMCG sectors showed resilience, attracting selective buying.

The broader markets demonstrated relative strength, with midcap and smallcap indices experiencing only slight declines, suggesting some selective investor interest despite overall weakness.

Upcoming Events

The coming week remains critical, as geopolitical developments in West Asia and their effects on crude prices are expected to influence market sentiment.

On the domestic front, the Q4 FY26 earnings season will accelerate, with significant companies in banking, financials, cement, metals, and consumer sectors set to announce results.

Investors will focus closely on management comments regarding input cost pressures, demand outlook, and profit margins.

Industrial Production data for March will be released on April 28, followed by foreign exchange reserves data on May 1. Globally, the US Federal Reserve’s policy announcement will be pivotal, providing direction on interest rates and liquidity.

Technical Analysis

Nifty has declined below a key support level at 23,900 (20-day moving average), suggesting a near-term negative bias. Immediate support lies around 23,500.

Resistance is expected between 24,200 and 24,500, where any recovery may encounter selling pressure unless supported by easing oil prices and improved global cues.

The Bank Nifty remains near key moving averages and is comparatively stronger than the broader market.

Support is near 55,600 (20-day moving average), with a significant support level at 54,300. Falling below these could signal further weakness.

The resistance at 57,700, if decisively breached, may lead to gains towards 59,000.

Despite benchmark declines, market breadth stayed relatively stable. The mild dips in midcap and smallcap indices indicate selective buying, although overall market sentiment remains cautious amid volatility and global uncertainties.

Investment Guidance

In view of ongoing macroeconomic uncertainties, elevated oil prices, and global risks, a cautious and selective investment approach is advised.

Traders should exercise discipline, avoid excessive leverage, and focus on preserving capital.

Given anticipated volatility due to geopolitical events and earnings reports, a hedged, stock-specific strategy is recommended until clearer trends develop.

The recommendation is to favor stocks in energy and metals sectors, with selective interest in FMCG and pharmaceutical stocks.

The recent steep decline in IT stocks has disrupted their recovery, and pressure is expected to continue short-term; therefore, new short-term investments in IT should be avoided.

Ajit Mishra – Senior Vice President, Research, Religare Broking Ltd.

Key Takeaways

  • Market ended lower after two weeks of gains due to geopolitical tensions and weak IT earnings.
  • Crude oil prices surged over 8%, driving inflation and fiscal concerns.
  • Mixed domestic economic data with weak core industries but strong PMIs.
  • IT sector declined over 10%, while energy and FMCG showed resilience.
  • Upcoming events include Q4 earnings, industrial production data, and US Federal Reserve announcement.
  • Technical outlook indicates negative near-term bias with support and resistance levels identified.
  • A cautious, selective investment approach focusing on energy, metals, FMCG, and pharmaceuticals is advised.