While strong quarterly earnings from TCS propelled the IT index 3.4% higher, the broader market, as measured by the Nifty, continued its decline, falling for the third consecutive session on Friday. This divergence highlights the ongoing weakness in other sectors despite the IT sector's strength.The index breached and closed below the crucial support level of 23,460, marking a weekly decline of 2.4%. The market continues to exhibit weakness, characterized by a lackluster trading session that resulted in a moderately negative candle with a minor lower shadow on the daily chart for the last trading session.Analyst Ruchit Jain, VP, Head – Equity Technical Research at Motilal Oswal interacted with ET Markets regarding the outlook on Nifty and Bank Nifty along with an index strategy for the upcoming week. Following are the edited excerpts from his chat:Nifty, Bank Nifty and Sensex are all comfortably below their 200 DEMAs. Let's discuss your very broad overview of how the markets are looking.Our markets have been correcting since the month of October 2024 and the benchmark indices have been forming a ‘Lower Top Lower Bottom’ formation. The key supports were breached in this correction and the RSI oscillator is also hinting at a negative momentum.This indicates a short-term downtrend in the market and if we look at the longer-term chart, then this seems to be a corrective phase within a broader uptrend. Until we see a negation of this short-term structure, we have a cautious view on the markets and hence, advise short-term traders to avoid bottom fishing. The immediate resistance is seen around 24,200 which needs to be surpassed for the negation of the uptrend.On the daily chart, Nifty is at its support. Where do you think the index will go from here now?Nifty has immediate support in the zone of 23,450-23,250 which is the previous swing low. However, the overall market breadth remains weak and hence, one should not be in a hurry to do bottom fishing. A break below this support could even drag the index towards 22,900. On the higher side, 23,800 followed by 24,200 are the immediate hurdles.Even the monthly chart displays weakness, with the index below its 10-month exponential moving average. Is it likely that the index goes down to the level of a 20-month EMA?Certain events in the near term such as Q3 corporate earnings and Union Budget will lead to the next directional move in the market. Our markets started correcting post Q2 earnings and hence, it will be crucial to see the market reaction to these events. In case of any major disappointment, we could see the index drifting lower gradually towards the monthly 20 EMA placed around 22,500.Coming to Nifty Bank. What is the outlook now? It seems to have a worse placement than Nifty. 200 DEMA breached, no crucial support seen near current levels. How to navigate this index?The Nifty Bank index has breached its important support of 49800 and has seen a follow-up selling as well. The current short-term trend remains weak with the next major support placed around 47,900. Until any reversal signs are seen, it is better to keep a wait-and-watch approach for the banking space.How do you read the current FII-DII activity?FIIs have started selling in the cash segment in the month of October 2024 during Q2 results. They have sold equities in the cash segment worth over Rs.1.9 lakh crores since October and have also been on the short side in the index futures segment.This combination generally leads to a price-wise corrective phase which we have seen. Their ‘Long Short Ratio’ is currently around 16 percent only which indicates short heavy positions by them. However, the market is favoring them and hence they may not be in a hurry to cover these positions.The Client section on the other hand has about 70% positions on the long side and if the markets do not recover soon, then they may look to unwind these positions as their positions are against the trend.Given these dynamics, what is the strategy for Nifty as well as Bank Nifty?Investors should wait for signs of reversal before taking any contra positions against the short-term trend. The positional supports in Nifty are placed around the 22,900 and 22,500-22,400 zone and should watch for reversal signs on either of these supports.In the larger picture, what would be your advice for the traders amid these volatile times?We advise traders and investors not to be in a hurry to do bottom fishing until there are signs of reversal. One should keep a close watch on the Q3 earnings, market reaction to the Budget and the FIIs positions which would give hints of probable direction going ahead.Nifty FMCG seems to have taken support and bounced back recently. Do you find any comfort in that space?The FMCG stocks have already seen a price-wise corrective phase and the index is now consolidating above its weekly 89 EMA support. As it is one of the sectors which witnesses buying interest during uncertain times, we have seen some support-based buying in certain stocks in the sector. However, a breakout above 58800 is required to change the trend to positive and thus one should keep a watch on the mentioned level.Meanwhile, the Nifty Pharma index seems to be encountering some resistance at higher levels. What is your take, given the outperformance of the stocks in this sector?Profit booking is seen in the pharma names post the recent up move. The RSI oscillator on the Pharma index hints at a negative momentum and hence, we advise to avoid the stock from this sector for now.Are there any stocks to look out for within these sectors?Amongst the FMCG basket, Marico has positive chart setups where the stock has been forming a ‘Higher Top Higher Bottom’ structure. Also, Tata Consumer has seen a buying interest from lower levels and looks good for a short-term pullback move.Any other sectors you would like to pick?The IT sector has seen good buying interest post-TCS numbers. Also, this has been an outperforming sector in the recent market corrective phase and hence, we expect the outperformance from the IT stocks to continue.Are there any well-placed stocks for the traders to place their bets on?Certain stocks such as M&M, Bharti Airtel and Bajaj Finserv are showing resilience and have seen a time-wise corrective phase in the last few months. This just seems to be a time-wise corrective phase and we expect these stocks to continue the relative outperformance to the market.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)