The bulls on Dalal Street finally hit a wall this week. After a two-week run, the broader market indices buckled under pressure, with selling seen across the board as a cocktail of global and domestic concerns soured investor sentiment. The benchmark indices, Sensex and Nifty, extended their fall for a second consecutive week, confirming that the bears have taken control for now.

The sell-off was driven by a trio of familiar culprits: a shaky start to the Q1 earnings season, rising global trade tensions fueled by the United States, and lingering uncertainty over a trade deal between India and the US.

For the week, the BSE Sensex index crashed 932.42 points, or 1.11 percent, to close at 82,500.47. The Nifty50 shed 311.15 points, or 1.22 percent, to finish the week at 25,149.85.

Let's break down what drove this market sell-off, which sectors got hit the hardest, and what the experts see coming next.

The Big Picture: Why the Bulls Ran for Cover

This week's decline wasn't caused by a single event but by a convergence of negative factors that gave investors plenty of reasons to take profits and reduce risk.

The Earnings Season Jitters

The Q1FY26 earnings season got off to a weak start, creating significant anxiety about corporate profitability. An uninspiring set of results from a key IT bellwether raised serious concerns over earnings estimates for the full fiscal year.

"As Q1FY26 earnings unfold, investors are closely monitoring guidance on margins and sector dynamics," said Vinod Nair, Head of Research at Geojit Investments. The fear is that a slowdown in major sectors like IT could lead to downward revisions of earnings estimates, making current market valuations look expensive.

A Global Web of Trade Tensions

Uncertainty on the global trade front was a major contributor to the cautious mood. President Donald Trump's statement that he plans to impose blanket tariffs of 15% or 20% on most trade partners sent ripples through global markets. "The lingering uncertainty around trade negotiations is likely to keep markets in a consolidation mode," noted Siddhartha Khemka of Motilal Oswal Financial Services.

Adding to the pressure were delays in finalizing the much-anticipated India-US trade pact and the US decision to extend tariff deadlines, which only added to the short-term confusion. Furthermore, the US move to impose a 35% tariff on Canada demonstrated a willingness to take aggressive trade action, dampening overall market sentiment.

FIIs vs. DIIs: The Great Divide Continues

The divergence between foreign and domestic institutional investors remains a key market theme.

Foreign Institutional Investors (FIIs) extended their selling for a second consecutive week, offloading equities worth a substantial ₹4,511.12 crore. This indicates that foreign investors remain cautious about the Indian market amid global uncertainties and premium valuations.

On the other hand, Domestic Institutional Investors (DIIs) continued their buying streak for the 12th straight week, purchasing equities worth ₹8,291 crore. This strong domestic flow has been a primary force supporting the market and preventing a steeper correction.

Sectoral Breakdown: Where Was the Pain (and Gain)?

The selling pressure was not evenly distributed, with rate-sensitive and globally-linked sectors taking the biggest hit. Defensive sectors, however, managed to hold their ground. The worst-performing sectors were BSE Telecom, which shed 4.4 percent, and BSE Information Technology, which fell more than 3 percent. Following them, BSE Consumer Durables lost 2.7 percent, while BSE Metal, Energy, and Auto indices were down around 2 percent each.

On the gaining side, the BSE FMCG index acted as a defensive haven for investors, adding 2 percent for the week. The BSE Power index also showed resilience, rising a modest 0.6 percent.

The outperformance of the FMCG sector highlights a key trend mentioned by analysts. "Consumption-oriented sectors such as FMCG and discretionary stocks experienced selective buying, supported by signs of urban demand revival and improving margins," explained Vinod Nair. This suggests that while the broader market is weak, investors are still finding pockets of strength in the domestic consumption story.

Small-Caps in the Spotlight: Big Moves on the Street

The BSE Small-cap index fell 0.6 percent for the week, but the real story was in the individual stock movements, where several companies saw dramatic price swings in both directions.

Top Losers This Week These small-cap stocks fell between 7 and 14 percent, feeling the heat of the market correction:

• Dreamfolks Services
• Hampton Sky Realty
• Paras Defence and Space Technologies
• Sadhana Nitrochem
• Garware Hi-Tech Films
• KR Rail Enginerring
• Sindhu Trade Links
• Sharda Cropchem
• Sigachi Industries
• Deepak Fertilisers And Petrochemicals Corporation
• HLE Glascoat
• Nacl Industries
• Indian Metals & Ferro Alloys

Top Gainers This Week On the other hand, these small-caps bucked the trend and delivered impressive returns of 15 to 39 percent:

• Peninsula Land
• Jaiprakash Power Ventures
• John Cockerill India
• Dish TV India
• Shiva Cement
• Force Motors
• ACME Solar Holdings

Technical Takedown: Where is the Nifty Headed Next?

The technical analysts are largely in agreement: the short-term trend has turned negative, and further downside is likely unless the bulls can reclaim key resistance levels.

The View from HDFC Securities

Nagaraj Shetti points out that the Nifty has slipped below the crucial support level of 25,200 on the weekly chart. He believes the underlying trend has turned down and further weakness could drag the Nifty down to the 24,800-24,700 level by next week. Any pullback rally could find resistance around 25,300.

The View from Kotak Securities

Amol Athawale highlights the formation of a bearish candle and a lower top formation. He notes that the Nifty has slipped below its 20-day SMA, supporting further weakness as long as the market remains below 25,300. Below this, he sees the market slipping to the 50-day SMA around 25,000, with a potential to be dragged down to 24,800-24,650.

The View from LKP Securities

Rupak De also sees continued weakness, with the Nifty falling below the 21-EMA and the RSI in a negative crossover. For him, key support is placed at 25,090 and 24,900. However, a move above 25,150-25,160 in initial trading could trigger a rally towards 25,250 and 25,400.

The Week Ahead: What Investors Are Watching

With the market in a consolidation phase, investors will be closely watching several key triggers in the coming week to gauge its direction.

According to Siddhartha Khemka, "As the earnings season progresses, markets are expected to witness volatility driven by stock-specific factors." He added that investors will now shift their focus to key domestic macro data and earnings updates.

Here are the key things to watch for:

• Domestic Macro Data: The upcoming releases of CPI and WPI inflation data will be crucial. Softer inflation could give the RBI more room to remain accommodative, which would be positive for the market.
• Q1 Earnings Season: Investors will be scrutinizing the Q1 results and, more importantly, the management commentary from companies across various sectors for clues about future growth and margin outlooks.
• India-US Trade Deal: Any updates or progress on the trade negotiations between India and the US will be a key factor in market sentiment.
• Global Cues: Other international data points, such as China's GDP numbers, will also be on the radar of investors.