Weekly Note : Markets Extend Recovery Amid Consolidation by Mr. Ajit Mishra, SVP - Research, Religare Broking Ltd
Markets extended their recovery for yet another week, registering nearly a one percent gain amid a phase of consolidation. After an initial surge, the benchmarks traded in a narrow range through the middle of the week, before witnessing profit-taking in the final session. Ultimately, the Nifty and Sensex ended at 24,039.35 and 79,212.53 respectively.
Key Market Drivers
Global market stability, driven by ongoing discussions between the United States and its trade partners on new trade agreements, helped ease concerns about the impact of tariffs on global commerce. This, coupled with renewed foreign institutional investor (FII) inflows, bolstered market sentiment. However, rising geopolitical tensions between India and Pakistan—following a terrorist attack in Kashmir—sparked investor caution and led to some profit-booking.
Sectoral Snapshot
Sector-wise, the sharp rebound in the IT sector stood out as a key driver. Additionally, the auto, pharma, and real estate sectors also posted gains. Conversely, financials and fast-moving consumer goods (FMCG) sectors ended the week in the red. Broader market indices managed to close in the green, delivering gains in the range of 0.83% to 1.73%.
Key Events to Watch
The upcoming holiday-shortened week also marks the beginning of a new month, making monthly auto sales data a key area of focus for market participants. On the macroeconomic front, investors will closely track the Index of Industrial Production (IIP) data and the HSBC Manufacturing PMI Final data. Meanwhile, geopolitical developments between India and Pakistan will remain on the radar.
On the corporate earnings front, several prominent companies—including BPCL, IOC, Kotak Mahindra Bank, SBI, Bajaj Finance, TVS Motor, and UltraTech Cement—are set to release their quarterly results. Globally, updates related to tariffs and trade will also be watched closely.
Technical Outlook
The Nifty’s sharp rebound over the past three weeks has been almost vertical, suggesting the possibility of some consolidation before the next major directional move. It will be crucial for the Nifty to hold the 23,800 level to maintain its bullish bias; a breach could lead to extended profit-taking, with the next major support seen near 23,400—where key moving averages such as the 20-day, 100-day, and 200-day EMAs converge. On the upside, a decisive breakout above 24,400 could re-ignite bullish momentum, potentially propelling the index toward the 24,800 mark.
Rate-sensitive sectors, particularly banking and financials have played a pivotal role in the recent market uptrend. While some consolidation may be seen in the banking index, the broader tone remains optimistic. In case of further correction, buying interest is expected to emerge around the 52,800–53,700 zone, with an upside potential toward 55,500–57,000.
Strategy Ahead
In the current scenario, it is advisable to maintain a positive yet cautious approach, with a preference for hedged positions in the index. Stock-specific opportunities are likely to remain abundant on both the long and short sides. Hence, the focus should be on identifying stocks with favorable risk-reward setups.
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