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Indian Markets Retreat Amid Profit Booking and Sectoral Pressure

By Mandar in Indian Market Insights —

Market Reversal on August 22, 2025

Indian equity markets experienced a significant downturn on August 22, 2025, reversing a week-long rally. The benchmark indices, Sensex and Nifty, both saw sharp declines during the trading session. The Nifty fell below the 25,000 mark, closing around 24,950, and the Sensex shed over 550 points. This indicated profit booking and a cautious investor sentiment, alongside sectoral sell-offs across banks, FMCG, and metals.

Market Sentiment and Technical Analysis

The Nifty's six-day winning streak showed signs of weakness as it approached key resistance levels.

  • The Nifty faced challenges near the resistance levels of 25,150 and 25,160.
  • Technical indicators like MACD and RSI, previously bullish, showed hesitation.
  • A bearish candle formation suggested profit booking at higher levels.

Important support levels to keep an eye on:

  • Around 25,000
  • Around 24,850

For further upward movement:

  • Nifty needs to break past the resistance zone of 25,160-25,250.

Bank Nifty's performance

  • Traded within a specific range during the session.
  • Support levels ranged from 55,600 to 55,450.
  • Resistance was observed near 56,000 to 56,200.

Potential outcomes:

  • Breaking above the resistance may lead to a rally towards 56,600.
  • Breaking below support could see declines toward 55,000.

Sectoral Performance

The day's key gainers and losers:

  • Gainers: Bharat Electronics, M&M, Maruti Suzuki, Sun Pharma, and Apollo Hospitals.
  • Losers: Adani Enterprises, Grasim, Asian Paints, Hero MotoCorp, and JSW Steel.

These performances added to the market's overall downward pressure.

Broader Market Dynamics

The impact of Foreign Institutional Investors (FIIs) on the market:

  • Continued selling streak, especially in financials and IT.
  • Net outflows for August are significant.
  • Yearly net outflow nears Rs 1.2 lakh crore.
  • Domestic inflows are providing some stability.

Key Actions for Investors

  • Monitor 25,000 and 24,850 levels on Nifty: These support zones could present buying opportunities.
  • Watch for a breakout above 25,150-25,250 resistance: This could confirm renewed bullish momentum.
  • Observe Bank Nifty's range 55,600-56,200: A breakout or breakdown will guide the next market direction.
  • Track sectoral shifts, especially in banks, FMCG, and metals: These sectors are currently under pressure.
  • Stay cautious of continued FII selling: This can limit upside potential in the short term.

Investors are encouraged to implement a "buy on dips" investment approach near support levels. At the same time, investors should stay informed about technical signals and sectoral performance. Doing so can help them effectively navigate the current market environment characterized by caution.