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

The stock markets kicked off 2025 on a positive note, with benchmark indices gaining nearly 1% despite volatility. Initially, the sentiment was subdued, showing slight improvement in subsequent sessions. However, the real momentum emerged on Thursday, enabling the indices to close higher despite a lackluster final session. As a result, the Nifty and Sensex ended the week at 24,004.7 and 79,223.11, respectively. Sectoral performance was mixed, keeping market participants engaged. Auto, FMCG, and energy sectors emerged as the top gainers, while realty and banking sectors ended in the red.

Looking ahead to the second week of the year, several key events are likely to influence market sentiment. The earnings season begins with IT major TCS, a key trigger as any signs of improvement in Q3 numbers could reverse the ongoing trend of FII outflows. Additionally, a host of economic data, including HSBC Composite PMI, HSBC Services PMI, Fiscal Year GDP Growth, and IIP, will be closely monitored for further cues.

From a technical perspective, the recent price action indicates that bulls are striving to defend the 200-day exponential moving average (DEMA). A successful breach of the 100-day DEMA, currently at 24,250, could provide further momentum, targeting the 24,400–24,800 range. Conversely, a decisive break below 23,700 could weaken bullish sentiment, with the next significant support at 23,250, the November 2024 low.

Given the current market dynamics, trading opportunities exist on both sides. A stock-specific approach is advised until a clearer trend emerges on the benchmark front. For short-term trades, sectors such as FMCG, auto, and energy are preferred, while a cautious stance is recommended for midcap and smallcap stocks. As the earnings season often brings heightened volatility, managing overnight risk remains crucial.

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