What to expect from markets next week: Experts see scope for more weakness amid IT pressure

As benchmark indices wrapped up a volatile week on a subdued note, market experts warn that the coming week could remain under pressure, especially if the Nifty fails to reclaim key resistance levels.

The Nifty closed below 25,500 on Friday, a development that, according to analysts, signals further weakness ahead.

Gaurang Shah of Geojit Investment said the index has slipped dangerously close to its post‑Budget lows. “Wednesday, Thursday, and Friday, I think we have broken the level of 25,500 for Nifty spot. We closed below it. We are very close to the low of the budget day,” he noted.

Shah added that sentiment had worsened as the week came to a close, “I think the disappointment has increased a bit more. It was the last day of the week and Nifty spot closed below 25,500. It is possible that in the coming week, we might see a bit more downside.”

A large part of the sell-off, Shah said, can be attributed to the persistent slide in IT stocks.

“The selling pressure that started last week shows no sign of stopping, and even on Friday, continuous selling was happening,” he said.

“Some IT sector stocks have made their lifetime or 92‑week lows. The IT index, I think, has also contributed greatly to the decline, and since IT has a slightly higher weightage on Nifty, the pressure continued to increase.”

However, Shah believes the reaction may be overdone and that valuations are becoming attractive, “We feel that this has been an overreaction… at valuation levels it looks attractive if you have a long‑term perspective.”

He expects some stabilisation once the earnings cycle wraps up, “On Friday and Saturday the remaining third‑quarter results will be completed, and then we will focus on other news and trends. We hope that next week there will be some improvement from here… but it will be essential to see how much more pressure increases from the IT sector.”

Offering a technical perspective, Laxmikant Shukla of YES Securities cautioned that Friday’s gap‑down opening itself signalled weakness. “The way the market gave a gap‑down opening on Friday indicates that weakness might increase in the coming time. If the market does not recover quickly with a close above 25,700, I feel that the decline might increase from here.”

Shukla flagged 25,380–25,280 as critical support levels, aligned with the 200‑day moving average, “The next support currently appears to be at 25,380… if the levels of 25,440 break, then currently the next support is around 25,280, where the 200 DMA is.”

Momentum indicators are also turning unfavourable, “RSI has already given a bearish crossover, and the histograms of MACD are now declining. These signals also indicate that correction will increase in the coming time.”

If 25,280 breaks, he warns the index may drift further, “If the levels of 25,280 break, then we feel that weakness will increase further downwards. Then the next level is directly coming around 25,000.”

Shukla was clear that sentiment remains negative until the Nifty recovers above a key threshold, “As long as Nifty remains below 25,700, the sentiment will remain bearish.”

On the banking index, Shukla noted that it is displaying some strength, though not enough to trigger fresh buying yet. “If we compare the charts of Bank Nifty, there is some strength there. Although even there, a consolidation breakdown has been seen at a smaller level.”

He warned that a key support has already been breached “Because the support was 65,000, Bank Nifty has given a close below it, and now the major support appears to be around 59,500.”

The index needs to hold above this level to allow any short‑term rebound, “As long as Bank Nifty trades above 59,500, a short‑term recovery can be seen here. However, one will have to wait a bit for fresh buying. Fresh buying momentum will only be triggered above 61,000.”