Indian Markets wobbly - what lies ahead? - Financial Market analysis for the week ended May 09, 2025

Nifty and Banknifty have given a sell signal on weekly charts by forming a Bearish Engulfing pattern with Banknifty having done so just 3 weeks after a breakout to an All Time High. Weekly charts below.

Weekly chart of Nifty illustrating a Bearish Engulfing pattern

Weekly chart of BankNifty illustrating a Bearish Engulfing pattern

While the war and the consequent uncertainty have had a definitive role to play in souring the mood, the focus of this post would be to look at the broader picture holistically.

When you look at CNXIT, Midcap and Smallcap - the technical picture looks more comforting. All the 3 indices have made a very strong bottom in the week of April 7 (Apr 9 being the day when the reciprocal tariff was put on hold) that coincides with multiple bottoms in the past and have subsequently given a breakout from a double bottom pattern. Weekly charts below.

Weekly chart of CNX IT illustrating a Double Bottom

Weekly chart of CNX Midcap illustrating a Double Bottom breakout

Weekly chart of Nifty illustrating a Double Bottom breakout

While the frontline Nifty and Banknifty have formed a worrying Bearish Engulfing pattern, the charts of these indices show sideways consolidation in the last 2-3 weeks. The other indices show a mixed picture on their weekly charts.

What does this mean? While the overall technical picture remains hazy, it does seem likely that the Indian markets might stage a recovery in the next week given the ceasefire announced yesterday and the strength in the US markets, with DJIA, Nasdaq and S&P having broken above a 1-2-3 pattern on their respective weekly charts. The events of the past week and the resultant market action does seem like a temporary aberration. Time will tell.

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