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

Markets experienced volatility during the holiday-shortened week but ultimately ended with solid gains. The week began on a subdued note, influenced by mixed signals, and pressure on select heavyweight stocks midweek turned the sentiment negative. However, a sharp recovery on Friday shifted momentum back in favor of the bulls, allowing the benchmark indices to close near the week's highs. Among the key sectoral indices, IT saw significant gains, followed by realty and auto, while energy and metal sectors ended in the red. The broader indices also managed to recover losses, with the midcap index gaining nearly a percent and the smallcap index finishing almost flat.

With the earnings season concluded, attention will now shift to global markets for cues, particularly in light of the notable recovery in U.S. markets, which has eased recession fears. Domestically, market participants will be watching institutional flows and upcoming economic data, such as the HSBC India Manufacturing PMI and HSBC India Services PMI, for direction.

Nifty has broken out of its consolidation phase and reclaimed its short-term moving average, the 20-day EMA, buoyed by the sharp rebound in global indices. It appears poised to fill the gap around 24,700 before potentially moving towards its record high i.e. 25,078. In the event of a dip, the 24,300-24,400 zone is expected to provide immediate cushion, with major support still intact at 24,000, near the 50-day EMA. Given the selective participation in the market, the focus should remain on stock selection, with a preference for IT, FMCG, and select private banking majors, while being selective in other sectors.

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