F&O Talk: Nifty loses key supports amid tariff turmoil: what’s next? Preeti Chabra weighs in

The long-anticipated reciprocal tariffs were yet unveiled by President Trump this week, jolting planetary plus classes—from equities and bonds to currencies and commodities. The U.S. medication introduced a baseline import tariff of 10% connected each countries.

India, however, faced a comparatively milder tariff complaint of 26%, which positioned its equity markets to outperform respective Asian peers. Despite this, Indian benchmark indices ended the week 2.6% lower, mostly dragged down by an 8.4% plunge successful the IT index. The crisp diminution successful IT stocks reflects mounting fears of a U.S. recession, a captious marketplace for the sector’s gross stream.

Between March 28 and April 4, some the Nifty and Sensex indices recorded a diminution of 2.6%. The Nifty fell from 23,519.4 to 22,904.5, portion the Sensex dropped from 77,415 to 75,365 during the aforesaid period.

In specified a market, expert Preeti K. Chabra, Founder of Trade Delta, interacted with ET Markets regarding the outlook connected Nifty and Bank Nifty, on with scale strategies for the upcoming week. Following are the edited excerpts from her chat:

Despite anemic planetary cues and tariff-related jitters, the Indian marketplace tried to amusement resilience and held cardinal levels. However, connected Friday, it took a downturn. How bash you present construe the terms enactment from an options marketplace perspective—do you spot further downside?

With the implementation of the 27% reciprocal tariff complaint connected imports from India, we are amended placed than astir of our competitory Asian peers similar Bangladesh and Vietnam. Currently, the marketplace is not pursuing immoderate method indicators and is wholly news-driven, arsenic a batch of structural changes are happening with caller tariffs coming into spot worldwide. The planetary proviso concatenation is going to change, and determination are a batch of unknowns.

I judge India is good positioned, and this could beryllium an accidental for america to amended vie with China, wherever the tariff interaction is comparatively higher. The time aft the tariff was announced, connected April 3, the Indian marketplace didn’t merchantability disconnected and was holding firm, which gave america an denotation that we would walk done this event. But connected April 4, we gave distant the important caller low—23,132—and the Fibonacci retracement level of 23,141, which we had been holding since March 21. I would similar to repetition that this is presently a news-driven market, and sentiment tin alteration astatine immoderate time.

The 200-DEMA is emerging arsenic beardown resistance. What benignant of enactment strategies would you urge for Nifty now?

Nifty is presently trading successful a downward-trending channel. We spot further downside arsenic planetary quality remains negative, with GIFT trading astir 22,343—a further diminution of 2.68%. Since the marketplace operation is present negative, we counsel a ‘sell-on-rise’ strategy. Given the precocious volatility, bare positions tin deed stop-losses precise easily, truthful a strategy with a fixed reward-to-risk ratio is the mode forward. We tin see a Bear Put Spread oregon a Bear Put Butterfly to instrumentality vantage of the bearish sentiment.

Bank Nifty defended its 200-DSMA and ended with a bullish candle.

Do you spot the imaginable for a breakout, and however should traders attack it utilizing Bank Nifty options?

Bank Nifty is presently trading successful a downward-sloping channel, connecting the precocious of 53,888 connected December 5 and 52,063 connected March 25. For Bank Nifty to crook affirmative connected a bigger clip frame, it has to adjacent supra this channel. A breakout supra 52,063 volition spot Bank Nifty successful a comfy affirmative zone.

We besides spot consolidation happening successful Bank Nifty—a rectangular signifier enactment betwixt March 24 and April 4—and immoderate breach of 50,742 connected the little broadside volition beryllium antagonistic for Bank Nifty.

So, connected the upside, 52,063, and connected the downside, 50,742 are important levels to watch. Traders tin see a Bull Call Spread to instrumentality vantage of a bullish stance oregon a Bear Put Spread to payment from bearish sentiment.

The broader marketplace outperformed, with some Nifty Midcap 100 and Smallcap 100 closing successful the green. But a reversal was witnessed connected Friday. What’s your instrumentality there, and immoderate bets?

In the mid-cap and small-cap space, we are focusing connected the pursuing names arsenic we spot upside successful them successful the adjacent future—Colgate, Marico, Max Financial Services Ltd, Ramco Cements, Torrent Power, GMR Airports, Paytm, and PNB Housing.

Pharma and PSU banks look to beryllium starring the market. Do you spot sustained bullish positioning successful these sectors that options traders tin capitalize on?

The pharma assemblage was excluded from the idiosyncratic reciprocal duties connected the time of the announcement, and we saw a immense run-up successful pharma stocks.

However, connected Friday, pursuing forthcoming announcements astir terrible tariffs connected this sector, we saw a crisp decline. At this moment, the pharma assemblage is news-driven, and sentiment changes arsenic quality flows in.

The PSU Bank Index is holding up and performing amended than different sectors. We are tracking Bank of Baroda and SBI successful this space.

IT and Auto were nether unit owed to U.S. slowdown fears and tariff impact. Do you spot further downside hazard successful these sectors, and what’s the champion mode to play them?

The car assemblage is not importantly impacted by the caller tariff rates, arsenic exports to the U.S. are minimal, and the assemblage is exempt from immoderate further duties beyond those implemented connected March 26. We suggest staying distant from stocks wherever the tariff interaction is higher, specified arsenic Motherson, Tata Motors, and Bharat Forge. In this sector, we similar TVS Motor.

The IT assemblage volition not look nonstop tariff consequences, but weaker U.S. GDP maturation could dilatory demand. Nifty IT is underperforming, and until we spot a method displacement successful momentum, we would debar taking immoderate bullish stance successful this space.

We saw beardown agelong build-up successful names similar PNB Housing, Patanjali, and IDFC First Bank. Would you urge immoderate bullish positions?

PNB Housing is looking positive, and we spot absorption astatine ₹977. A Bull Call Spread tin beryllium made by buying the 940 CE and selling the 980 CE.

Patanjali has absorption successful the ₹1885–1900 zone. Once it breaks retired of this range, a Bull Call Spread tin beryllium considered by buying the 1900 CE and selling the 2000 CE.

IDFC First Bank made an unfastened precocious of ₹60.5 connected Friday and is facing absorption astir ₹60.9. RSI has turned negative, truthful it tin beryllium avoided for now.

Short build-ups were observed successful counters similar Jindal Steel, Persistent Systems, and Hindustan Zinc. How tin options traders operation bearish bets portion managing risk?

Jindal Steel looks weak. A Bear Put Spread tin beryllium implemented by buying the 850 PE and selling the 820 PE.

Persistent has enactment astatine ₹4400. A Bear Put Spread with a 4600 PE bargain and 4400 PE merchantability is advisable.

For Hindustan Zinc, to capitalize connected bearish sentiment, a Bear Put Spread with a 430 PE bargain and 400 PE merchantability is recommended.

With Trump's 26% tariff announcement and fears of a planetary slowdown, however should options traders hedge against lawsuit hazard successful the coming sessions—through scale straddles, VIX-based strategies, oregon calendar spreads?

India VIX, besides known arsenic the fearfulness index, is trading astatine 13.75, which, successful my opinion, is connected the little broadside considering the home and planetary volatility we are presently seeing. I expect VIX to summation successful the coming sessions. Hence, agelong butterflies oregon agelong debit spreads are advisable. In the existent scenario, it is ever omniscient to hedge overnight positions owed to heightened gap-up and gap-down risks.

Any sectors you privation to bring into the limelight?

I stay affirmative connected the banking sector. Even successful the existent marketplace scenario, Bank Nifty appears stronger and much resilient than immoderate different sector. Moreover, successful the upcoming RBI argumentation gathering scheduled for April 7–9, 2025, there’s an anticipation of a 25 bps chopped successful the repo rate, bringing it down to 6.25%—the archetypal chopped successful astir 5 years. This would supply a beardown boost to the banking assemblage and enactment broader economical growth.

Any stocks wrong those sectors?

In backstage assemblage banks, we spot further upside successful HDFC Bank and ICICI Bank. Among PSU banks, we are affirmative connected Bank of Baroda and SBI.

(Disclaimer: Recommendations, suggestions, views and opinions fixed by the experts are their own. These bash not correspond the views of The Economic Times)