Indian equities slip over 2% as mid- and small-cap indices record steep weekly declines
Nifty and Sensex fell more than 2% last week amid rising oil prices and continued foreign institutional selling, while mid-cap and small-cap indices posted their sharpest weekly drops since February 2025.
Indian equity markets faced renewed selling pressure last week, with the Nifty 50 and Sensex each losing over 2% and ending the session in bearish territory. The decline was attributed to higher oil prices, persistent foreign institutional investor (FII) outflows and technical resistance at the 38.2% Fibonacci retracement level near 23,200.
The broader market underperformed the benchmark, as the Nifty Midcap 100 fell nearly 6% and the Nifty Smallcap 100 dropped more than 7%, marking their steepest weekly declines since February 2025. Both indices traded below key short-term and long-term moving averages, and their RSI readings remained in bearish zones.
Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, said the Nifty’s support zone lies between 22,350 and 22,300, warning that a sustained break below 22,300 could push the index toward the 22,000 level. On the upside, resistance is expected around 22,800-22,850, coinciding with the 20-day exponential moving average.
"FIIs were net buyers in the cash market on October 23, purchasing equities worth Rs 888 crore, but cumulative outflows over the past five sessions total Rs 1,531 crore, indicating a bearish stance," Shah noted.
He added that the FII long-short ratio in index futures has stayed within the 8-11% range since early October, with no clear signs of short covering.
Volatility, measured by the India VIX, has risen about 41% since early September, breaking out of its previous consolidation range and trading above key moving averages. The index’s support is seen near the 15.5-15 zone, and sustained levels above this range suggest continued elevated volatility.
Among sectoral trends, the IT sector displayed relative strength, while most other sectors, including defence, consumer durables and energy, were expected to remain under pressure. Specific stocks such as Eternal, Swiggy, eMudhra and Ola Electric were highlighted as maintaining bearish bias unless they break key support levels.
Overall, technical indicators point to further downside risk for the Nifty and its broader market components in the near term.