In his latest weekly newsletter, Ticker, veteran market analyst Vijay L Bhambwani has issued a clear directive to investors: this week is a time to prioritise capital preservation over capital appreciation. This shift in strategy comes after a turbulent week where the markets were rattled by a cascade of negative geopolitical news, leading to the Nifty's most significant weekly decline in four months.
Geopolitical Storm Drives Market Sentiment South
Bhambwani noted that his previous hypothesis of the Nifty being in a resilient "blue-sky zone" did not materialise. Instead, bearish triggers emerged consistently throughout the week. The primary dampeners were actions and statements from US President Donald Trump. His continued pressure on emerging markets, threats against South American nations following action on Venezuela, and diplomatic friction over Greenland unnerved global investors.
Simultaneously, unrest in the Middle East added fuel to the fire. Political riots and internet shutdowns in Iran, a major oil and gas exporter, triggered short-covering in the oil market, pushing crude prices higher. Bhambwani warns that elevated oil prices, which jumped late on Friday, will be discounted in Indian markets this week, raising concerns over inflation and the rupee-dollar equation.
Sector-Specific Volatility and Key Indicators
The analyst expects continued hectic activity in Public Sector Undertaking (PSU) stocks, with a likelihood of profit-booking on long positions. Metal mining companies may also see volatility due to swings in industrial metal prices. Companies dependent on petrochemicals as raw materials could see stock prices soften as oil remains in the eye of the geopolitical storm.
Bhambwani's analysis of market internals paints a cautious picture. The NSE advance-decline ratio plummeted to 0.59 from 1.45 the prior week, meaning there were only 59 gainers for every 100 losers. This erosion in buying conviction was mirrored in derivatives data, where retail risk appetite "fell off a cliff," with traders shifting from high-risk stock futures to relatively safer index options.
Furthermore, his proprietary indicators like 'Impetus' and 'LWTD' (Lift, Weight, Thrust, Drag) suggest the recent fall was on higher momentum and that fresh buying support appears weak. The Market-Wide Position Limits (MWPL) also rose sharply, hinting at the risk of a crowded exit if negative sentiment persists.
Key Levels and Actionable Advice for Traders
On the charts, the Nifty formed a bearish engulfing pattern with a large weekly candle. Bhambwani states that bulls must push the index above 26,373 to regain control. The crucial medium-term support is the 25-week average at 25,512; a sustained break below could expose further downsides.
For the coming week, he estimates a range of 26,150 to 25,200 for the Nifty and 60,250 to 58,225 for the Bank Nifty. His core advice is unequivocal: "Capital is your freedom to trade the next day. Keep it intact to stay in the game." He urges traders to operate with strict stop losses, employ tail-risk hedges, and avoid counters with wide spreads.
In other asset classes, Bhambwani notes that while bullion saw a revival due to the Iran unrest, investors should avoid leverage and wait patiently for deliveries. With India's forex reserves falling by $9.8 billion to $686.8 billion, there could be near-term pressure on the rupee, and firming sovereign yields suggest a rising cost of funds for fresh bond issuances.
