Indian stock market: Nifty 50 slips below 25,600 — Key technical levels to watch out this week

The Indian stock market kicked off the final week of June on a cautious note, with benchmark indices witnessing profit-booking amid weak global cues and sectoral churn. The Nifty 50 index, after scaling record highs last week, slipped below the crucial 25,600 mark in early trade on Monday, triggering concern among traders about potential near-term consolidation.

At the closing bell on Monday, the Nifty 50 was down 143 points or 0.56%, settling at 25,563, while the BSE Sensex dropped 523 points or 0.66% to end at 84,079. The broader market, however, displayed resilience, with the Nifty Midcap 100 and Smallcap 100 indices managing to stay in the green.

Global Pressure, Domestic Triggers Weigh on Sentiment

Weakness in global equities, triggered by concerns over prolonged high interest rates in the US and a mixed bag of macroeconomic indicators from China and Europe, set a cautious tone for Indian markets. Adding to the pressure was the monthly derivatives expiry due this Thursday and a bout of profit-booking seen in heavyweight stocks across banking, IT, and FMCG segments.

“The Nifty's retreat from its recent peak is a natural correction in an overheated market. We're seeing investors booking gains as valuations in several sectors have run ahead of earnings,” said Nilesh Shah, Managing Director at Kotak Mahindra Asset Management Company.

Technical View: 25,400 is Crucial Support Zone

From a technical standpoint, the breach of 25,600 is significant, as the level acted as a short-term support during the previous week. Market analysts now see the 25,400–25,300 zone as the next key support area, with 25,800 acting as immediate resistance.

“Momentum indicators like the RSI are showing negative divergence on the daily chart. Unless Nifty decisively reclaims 25,800 levels, we may see a sideways to downward bias in the near term,” explained Rupak De, Senior Technical Analyst at LKP Securities.

He added that a breakdown below 25,300 could trigger a deeper correction toward 25,000 levels, whereas any rebound from current levels must be supported by volume-led buying in frontline stocks.

Sectoral Trends: Banking, IT Under Pressure; Energy and Auto Shine

On the sectoral front, financials, especially private banks, dragged the index lower. HDFC Bank, ICICI Bank, and Axis Bank were among the top laggards. The Nifty Bank index was down nearly 1% intraday.

IT stocks also remained under pressure amid a firm dollar and weak commentary from US peers. Infosys, TCS, and Wipro all closed in the red. In contrast, the energy and auto sectors showed relative strength. Reliance Industries gained over 1% on reports of robust Jio growth, while Mahindra & Mahindra rose after a positive outlook from foreign brokerages.

“Rotational buying is visible in autos, capital goods, and energy. This suggests selective participation is continuing even if the broader market sees profit-booking,” noted Vinod Nair, Head of Research at Geojit Financial Services.

FII Activity and Derivatives Data

Foreign institutional investors (FIIs) turned net sellers for the second consecutive session, offloading shares worth ₹1,200 crore on Friday. Analysts attributed this to risk-off sentiment globally and rebalancing ahead of the month-end.

Open interest data in the derivatives segment also suggests a buildup of short positions in the 25,600 and 25,700 strike calls, while support is seen building near the 25,300 put.

“This week’s expiry is expected to be volatile with strong resistance near 25,800. Traders should adopt a cautious stance and hedge their positions given the sharp swings,” said Kunal Shah, Senior Derivatives Analyst at ICICI Direct.

Macroeconomic Cues Ahead

Investors will closely watch India’s fiscal deficit and core sector data due later this week, along with global inflation prints and central bank commentary. Domestically, GST collection trends and monsoon progress are also being monitored as they impact rural demand and inflation outlook.

“The next few sessions will be event-driven. Unless there is a major positive catalyst, markets may remain range-bound with a negative bias,” said Siddharth Bhamre, Head of Research at InCred Equities.

Investor Outlook: Time to Stay Stock-Specific

While short-term volatility has returned, long-term fundamentals remain intact, supported by robust corporate earnings, a stable political environment, and healthy macro indicators.

Market veterans advise investors to stay stock-specific and avoid aggressive index bets at current levels.

“Use dips to accumulate quality stocks in sectors like autos, capital goods, defence, and select financials. Avoid chasing high-beta names or recent rally leaders as correction risk remains high,” suggested Mahesh Patil, CIO at Aditya Birla Sun Life AMC.

The correction in Nifty 50 below 25,600 has brought technical vulnerabilities to the fore, especially ahead of the derivatives expiry. While a steep fall is not forecasted, consolidation and sector rotation are likely to dominate trading activity in the near term. Staying nimble, tracking key levels, and maintaining disciplined allocation remain essential strategies for market participants in the week ahead.