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Below the Quote on Weekly Note Sep 13 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd

Strong Weekly Gain on Trade Optimism and Fed Hopes; Data Week Ahead

Market Summary

Indian equities ended the week on a strong note, supported by favorable domestic developments and a supportive global backdrop. The tone remained broadly positive throughout the week, aided by rotational participation of heavyweights across sectors. Consequently, both benchmark indices closed near the week’s high, with the Nifty settling at 25,114.00 and the Sensex at 81,904.70, registering gains of over 1.5% each.

Key Market Drivers

Investors continued to cheer the recently announced GST reforms, while upgrades to growth expectations and improving domestic demand further underpinned sentiment. Additionally, optimism over the resumption of India–US trade talks, coupled with softer US inflation prints that reinforced expectations of a Fed rate cut, provided further support to the rally.

Sectoral Snapshot

Market leadership was dominated by technology and cyclicals. After months of underperformance, Information Technology staged a sharp rebound, rising over 4%, aided by favorable global cues and the buyback announcement from Infosys Ltd. Autos and metals also maintained their positive momentum. Meanwhile, banking and financials participated in the uptrend but lacked strong leadership, limiting the overall pace of gains.

On the broader front, both midcap and smallcap indices advanced in line with the benchmark, adding around 2% each. Additionally, themes such as defense and railways, which had been under corrective pressure, also regained traction.

Key Events to Watch

On the domestic front, investors will monitor the release of the Wholesale Price Index (WPI) and further updates on GST implementation. Globally, all eyes will be on the FOMC policy decision, with markets largely expecting a rate cut following weaker US job data and moderating inflation. Updates on the progress of the India–US trade deal will also remain a key factor to watch.

Technical Outlook

Nifty (25,114.00): The index has tested its previous swing high near 25,150. While some consolidation cannot be ruled out, the prevailing positive bias remains intact, with the next upside target seen in the 25,250–25,500 range. On the downside, 24,800 is the immediate support, with the 100-DEMA near 24,650 acting as a stronger cushion.

Bank Nifty (54,809.30): The index has reached its immediate resistance zone around 55,000, where the 100-DEMA coincides with price hurdles. A decisive breakout could trigger short covering and pave the way for a move toward 56,200. On the downside, the 54,000–54,400 zone provides initial support, while the 200-DEMA near 53,600 remains a major cushion.

Broader Indices: Midcaps and smallcaps continue to indicate further recovery potential, with smallcaps showing scope for a catch-up move. However, traders should remain selective and focus only on fundamentally sound counters. Sustained strength in the broader markets, coupled with a recovery in banking, will be critical for a durable uptrend.

Strategy Ahead

We maintain a positive stance on equities, though the performance of banking majors will likely dictate the pace of momentum in the near term. Investors should continue to focus on domestic cyclicals such as autos, metals, and consumer discretionary, while holding defensives like select FMCG and pharma as portfolio stabilizers. Additionally, emerging signs of reversal in defense and railway themes offer attractive buying opportunities.

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