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Benchmark indices closed sharply lower on Tuesday, August 26, amid intense selloff pressure across key sectors, with bears firmly in control of Dalal Street. The sharp correction was triggered by geopolitical jitters after a draft proposal surfaced indicating former U.S. President Donald Trump's intent to impose a steep 50% tariff on Indian imports. The Nifty 50 plummeted 255 points, or 1.02%, to settle at 24,712.05, reflecting broad-based weakness. Sectoral breadth was deeply negative, with Realty, PSU Banks, Pharma, and Small Caps leading the laggards. Midcap and Energy counters also witnessed profit-booking, shedding over a percent each. Metals, Infra, Oil & Gas, and Private Banking names traded in the red, mirroring the broader downtrend. On the flip side, FMCG stocks bucked the trend, emerging as the lone sectoral gainer with a solid uptick of around 1%, signaling a flight to defensives. Auto stocks failed to hold ground and closed lower, dragged by persistent selling pressure. Market volatility spiked, with the India VIX climbing over 3%, signaling heightened risk aversion and caution among market participants.

Nifty Outlook

The index formed a sizable bear candle with a lower high and lower low signaling corrective bias. Index in the process filled the last Monday’s gap up area and closed below the 20- & 50-days EMA. Going ahead a follow through weakness below the lower band of the last Monday’s gap (24,673) will open further downside towards 24,500-24,400 levels in the coming sessions. While holding above the lower band of the gap will signal consolidation in the range of 24,670-25,000. We recommend a staggered accumulation approach, focusing on fundamentally sound counters, particularly those likely to be beneficiaries of the upcoming GST rationalization. While the short-term support base higher towards 24,500-24,350 levels being the confluence of the 100 days EMA and the recent lows placed around 24,350 levels.

 Bank Nifty Outlook

 Bank Nifty formed a sizable bear candle with a lower high and lower low signaling continuation of the corrective decline as the index closed below the 100 days EMA. Index in the process closed below the last 3 weeks range (54,900-56,100) highlighting extension of the decline. Going ahead, failure to move above 55,000 will keep the bias down and will open downside towards 54,000 and 53,500 levels in the coming sessions. Key support is placed at 53,500 levels being the confluence of the 200 days EMA and the low of May 2025. 

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