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

Markets ended the week with decent gains, offering relief after weeks of correction. Despite a negative bias for most of the week due to persistent FII selling, Friday’s sharp recovery, led by bargain hunting in index heavyweights, helped indices close near their highs. The Nifty and Sensex gained nearly 2%, ending at 23,907.20 and 79,117.10, respectively.

Most sectors, except energy, contributed to the rebound, with realty, auto, and FMCG leading the pack. IT and banking played a pivotal role in capping losses and driving the recovery in the benchmark. Broader indices also edged higher, with gains ranging between 0.9% and 1.8%.

Looking ahead, markets will first react to the outcomes of the Maharashtra and Jharkhand elections. Additionally, macroeconomic indicators, including GDP and infrastructure output, will garner significant attention. Participants remain focused on FII fund flows, given their ongoing selling spree.

Technically, the Nifty reclaimed its 200-day exponential moving average (DEMA) and is now approaching the next resistance at its 20-DEMA, near 24,020. A decisive move above this level could push the index further toward the 24,350-24,550 range. On the downside, 23,500 remains a strong support zone, cushioning any dips.

We continue to favor the IT and banking sectors, which have shown resilience and contributed to the recovery. While other sectors are showing potential, we recommend being selective, especially in midcap and small-cap stocks, as they remain vulnerable to volatility. Investors are advised to focus on quality stocks within index-heavy sectors and adopt a cautious stance in broader markets.

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