D-Street Ahead: How will the Indian stock market move next week? Key technical levels for Nifty, Sensex

D-Street Ahead: Domestic equity benchmarks Sensex and Nifty 50 suffered their biggest intraday drop of 2025 and extending losses to the eighth straight day dragged by persistent foreign capital outflow amid weak global cues. The indices closed lower for the fifth consecutive month and hit their lowest levels since June 2024 primarily over the impact of US tariffs on global trade.

The Nifty 50 index declined by nearly three per cent over the week to settle at 22,124.70, while the BSE Sensex dropped 2.81 per cent to settle at 73,198. The broader market remained under pressure, with the small-cap and mid-cap indices registering losses of approx six per cent and five per cent, respectively. 

Also Read: Stock market crash: Nifty logs longest monthly losing streak in 29 years; What should be your trading strategy?

Indian stock market's performance last week

The frontline indices extended their losing streak for the third consecutive week. Sensex was down 2,112.96 points or 2.80 per cent, and the Nifty tanked 671.2 points or 2.94 per cent on the week. In February, the Nifty is down 1,383.7 points or 5.88 per cent and Sensex lost 4,302.47 points or 5.55 per cent.

The market capitalisation of BSE-listed firms eroded by ₹9,08,798.67 crore to ₹3,84,01,411.86 crore on Friday. The market cap dropped by ₹93.91 lakh crore from September's record high of ₹4,77,93,022.68 crore. Investors' wealth crashed by ₹9 lakh crore on Friday, bringing the total wealth erosion for the week to ₹20 lakh crore.

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The BSE benchmark, which hit a record peak of 85,978.25 on September 27 last year, has given up 12,780.15 points, or 14.86 per cent from the peak. Nifty has crashed 4,152.65 points, or 15.80 per cent, from its record high of 26,277.35 on September 27, 2024. The Nifty IT index hit a six-month low.

The broader and more domestically focussed mid-cap index confirmed a bear market, falling more than 20 per cent from its September 24 record close, pressured by poor earnings, lofty valuations, looming US tariff concerns and persistent foreign outflows. The small-cap index had confirmed the trend earlier. 

In February 2025, the mid-cap and small-cap indexes declined 11 per cent and 13 per cent, respectively, posting their worst monthly performance since the COVID-19 pandemic-induced selling in March 2020. Additionally, the Indian rupee depreciated 19 paise to close at 87.37 against the US dollar on Friday.

Also Read: FPIs remain net sellers for 4 of 5 months, sold worth ₹1.13 lakh crore in just 2 months of 2025

Sensex, Nifty, and Bank Nifty technical levels to watch

Amol Athawale, VP-Technical Research, Kotak Securities views the current market condition as weak but oversold, hence the strong possibility of a pullback rally from the current levels is not ruled out. For short-term traders, 22,200/73,500 would be the key level to watch out. 

"Below this, the market could slip to 22,000-21,800/73,000-72,500. On the flip side, if the index sustain above 22,200/73,500, sentiment could change. Above 22,200/73,500, we may see a quick pullback rally up to 22,300/74,000, with further upside potential that could lift the market up to 22,500/74,500," said Athawale.

From a technical perspective, the Nifty 50 index is approaching a crucial support zone of 21,800-22,000, where multiple indicators signal an important inflection point. “A decisive break below this range could extend the decline toward the 21,000-21,200 zone, potentially pushing the index officially into a bear market,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.

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On the upside, a rebound would face resistance in the 22,500-22,750 zone. "Previously, we highlighted the importance of banking and IT sectors in shaping market direction. The steep correction in IT has validated this view, leaving the banking and financial sector as the key pillar of support. If the banking index fails to sustain above 47,500, it could also turn negative, adding further pressure on the market," he said. 

Puneet Singhania, Director at Master Trust Group said Nifty 50 is forming a strong negative candle at weekly charts, signalling continued selling pressure. The index has breached the crucial 22,500 support, now a major hurdle. 

“Trading below the 21-day and 55-day EMAs, Nifty is near the 100-week EMA at 22,041, aligning with the key psychological level of 22,000. A breakdown below this could push the index towards 21,700. However, the daily RSI at 22 indicates oversold conditions, suggesting a possible technical bounce,” said Singhania.

Nifty shed over 400 points after a consolidation breakdown. "The RSI remains bearish but has entered the oversold zone. In the near term, Nifty is expected to find support around 21,800-22,000. A sustained move above 21,800 could lead to a significant recovery, while failure to hold this level may trigger another sharp decline,” said Rupak De, Senior Technical Analyst at LKP Securities.

Bank Nifty closed negative but holds above the key 47,800 support, aligned with the 100-week EMA at 47,516. However, trading below the 21-day and 55-day EMAs signals weakness and selling pressure at higher levels. Technically, the index formed a red candle on the daily chart, reflecting weakness.

“Immediate resistance is at 49,000, any rise near this level may invite fresh selling pressure. However, a breakout above this could push the index toward 49,600, but the broader outlook remains bearish,” said Puneet Singhania.

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D-Street trading strategy for next week

Ajit Mishra of Religare Broking Ltd maintains a negative outlook on Nifty until clear signs of reversal emerge. With sectoral declines occurring in rotation, only a few stocks show relative strength. “Traders and investors should exercise caution regarding stock selection and risk management, avoiding the temptation to average down loss-making positions or engage in bottom fishing, particularly in the midcap and small-cap segments,” said the expert.

According to Puneet Singhania, the overall trend remains weak, favouring a "sell on rise" approach. Any upward move may face resistance, reinforcing bearish sentiment in the near term. For Bank Nifty, the prevailing trend favours a "sell on rise" strategy, with any upward move likely facing resistance. Sustained weakness below support could accelerate downside momentum in the coming sessions.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.