Dalal Street enters consolidation phase amid volatility and global uncertainty

Indian equity markets appear to be entering a phase of consolidation, with heightened volatility and limited directional clarity as global uncertainties and mixed domestic signals keep investors cautious, market experts said.

Benchmark indices ended the holiday-shortened week on a subdued note, extending their recent weakness. The Nifty declined by nearly half a per cent, while the Sensex also closed lower, marking a sixth consecutive week of losses.

Despite the soft headline performance, analysts pointed to a shift in underlying market dynamics. According to market participants, the current phase is characterised by consolidation rather than a clear bearish trend, with domestic institutional flows and technical support levels helping to prevent sharper declines.

However, the broader structure remains fragile. Analysts highlighted that the Nifty’s immediate support lies around the 22,500 mark, while the 22,900 to 23,000 range continues to act as a strong resistance zone due to persistent selling pressure. Unless the index manages to sustain above this band, the near-term strategy is likely to remain “sell on rise”.

Market volatility is being driven largely by external factors, particularly geopolitical tensions involving the United States and Iran, which have kept crude oil prices elevated. For India, a major oil importer, rising crude prices pose risks to inflation, currency stability and overall market sentiment.

Experts expect the coming week to remain event-heavy, with both domestic data releases and global developments influencing investor behaviour. Movements in oil prices and further escalation or de-escalation in geopolitical tensions are likely to be key determinants of market direction in the near term.