Spookedby the Trump’s 25 per cent tariff on India, hawkish Fed signals, mixed Q1 earnings and persistent FII selling; stock markets extended the fall for fifth consecutive week, recording the longest weekly losing streak in two years.

For the week, the Sensex declined 863.18 points or 1.05 percent to end at 80,599.91, while the Nifty fell 271.65 points or 1.09 percent to close at 24,565.35. Losses were widespread in the broader market, the BSE Mid-cap Index fell 1.8 percent and the BSE Small-cap index shed 2.5 percent. Sectorally, Nifty Realty index slipped 5.7 percent, Nifty Metal index shed 3.4 percent, Nifty PSU Bank index declined 3.2 percent and Nifty Media index fell 3 percent. However, the Nifty FMCG index rose 3 percent. FIIs extended their selling for fifth consecutive week by selling equities worth Rs 20,524.42 crore. DIIs continued their buying for 15th straight week, with purchases worth Rs 24,300.05 crore.

It is pertinent to observe that FII short interest in index futures has surged to 90 per cent, the highest since March 2023. The Indian rupee extended the losses in the fourth consecutive week to end at Rs 87.52 per dollar. The dollar index surged 2.5 per cent last week to cross the 100 mark, reaching a two-month high and registering its strongest weekly gain in nearly three years.

Under the shadow of US Tariff salvo, all eyes will now be on the forthcoming RBI’s Monetary Policy Committee meeting from August 4 to 6. Expectations are that RBI in its August 8th meeting will opt for 25 or even surprise with a 50 basis points rate cut bringing an “early Diwali” by boosting credit growth. The central bank’s commentary on inflation, liquidity, and growth outlook will be keenly watched. A dovish tilt could offer support to rate-sensitive sectors.

Investor confidence took a hit after U.S. President Donald Trump signed an executive order imposing a 25 per cent tariff on Indian goods, sharper than anticipated, and reaffirmed penalties on nearly 70 countries. Market players will be closely tracking diplomatic developments around the proposed US-India trade deal this week watching how policymakers respond diplomatically ahead of the next scheduled discussions.

Q1 FY26 earnings season continues, with 128 companies scheduled to announce their financial results in the coming week. Among the key companies to watch are DLF, Adani Ports, Bharti Airtel, Lupin, Bajaj Auto, BHEL, Trent, BSE, LIC, Titan, and Tata Motors.

Follow market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock is its performance over five years.

FUTURES & OPTIONS / SECTOR WATCH

Nervousness over the Trump tariff salvo and relentless FII selling; the settlement week witnessed sharp cuts in both the index and stock futures in the derivative segment. The Nifty index declined by over 1 per cent, while Bank Nifty fell more than 1.5 per cent over the week. Nifty rollovers also dropped to 75.71 per cent in July, down from 79.53 per cent in June. Despite a modest rise in open interest and subdued rollover cost, the absence of a strong buildup in either direction hints at a wait-and-watch approach. The tone for the new series remains subdued, with early signs pointing towards a bearish-to-range-bound phase. In the options segment, the highest Call open interest was seen at the 25,000 and 24,800 strike levels, whereas Put writing was prominent at the 24,500 strike. Implied volatility (IV) for Nifty’s Call options settled at 10.63 per cent, while Put options concluded at 11.27 per cent.

The India VIX, a key indicator of market volatility, concluded the week at 11.54 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 1.09 for the week. In the Bank Nifty rollover rose to 77.98 per cent, showing relative strength. Key rollover zones are 24,800–24,850 for Nifty and 56,200–56,300 for Bank Nifty. Failure to break above these levels could trigger further downside. The FII long-short ratio nosedived from 37.92 per cent at the start of the series to a multi-year low of 9.59 per cent. Such extreme bearish positioning often signals an overextended market, with the possibility of a sharp rebound once short-covering is triggered. Early unwinding from FIIs will be key for any bullish reversal. Traders should watch these levels, open interest trends, and geopolitical cues closely in upcoming sessions. For the upcoming sessions, Nifty has support at 24200 and 24000 level whereas resistance is placed at 24900-25000 zone.

Stocks looking good are Asian Paints, Dabur, HDFC Bank, HUL, Indian Hotels, Jindal Steel, JSW Steel and Ultratech. Stocks looking weak are Aurobindo Pharma, BHEL, BDL, Dr Reddy’s, Granules, IEX, IOC and UPL.

(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)