Key technical levels for Nifty, Sensex in the first week of FY26

The Indian stock market has been in a consolidation phase, with Nifty trading within a narrow range of 23,400–23,800, staying above critical support levels marked by the 100- and 200-day exponential moving averages (DEMA). Experts suggest that a breakout above these levels could set the stage for a rally, while a breakdown may extend the current consolidation phase. Nifty closed at 23,519.30, and Sensex at 77,414.92 at the end of last week, marking a modest gain of around 0.70%.

Performance Recap:

The Indian equity markets were largely range-bound last week, digesting the sharp rebound seen earlier. Although there was initial positive momentum, profit-taking emerged in later sessions, limiting further gains. Domestic benchmarks extended their winning streak for the second consecutive week, with both Nifty and Sensex surging to an 11-week high before paring some of their gains. The Bank Nifty was the standout performer, rising nearly 2% to end the week at 51,564.81.

Foreign investor interest played a crucial role in supporting the market, evident through increased buying in the cash segment and short-covering in derivatives. Volatility persisted due to concerns over US tariffs, which impacted global sentiment and slightly dampened domestic momentum.

Sector Performance:

Banking and financials continued their outperformance, while sectors like pharma, auto, and realty saw some profit booking. The defense and public sector undertakings (PSUs) sectors remained in focus, along with sustained interest in midcap and smallcap stocks. Financial stocks were the largest contributors to the Nifty 50’s performance, while the Nifty PSE and FMCG sectors saw gains, whereas media and pharma sectors lagged.

Technical Levels for Sensex, Nifty, and Bank Nifty:

Nifty remains in a narrow range of 23,400-23,800, with key support at the 100- and 200-day EMAs. A decisive breakout could push Nifty towards 24,100, while a breakdown could send it to 23,100, according to Ajit Mishra, SVP of Research at Religare Broking.

For the Bank Nifty, the 50,700 level, which previously acted as resistance, is now a crucial support level. A gradual move towards 52,800 is expected, with 53,900 as the next major target. Mishra suggests that the banking index could continue to outperform the broader market.

Outlook for Next Week:

Puneet Singhania, Director at Master Trust Group, points out that Nifty's surge of 6.3% for the month was supported by foreign inflows, with strong support at 23,300. If breached, Nifty may decline towards 23,000, but resistance at 23,800 will be key for a potential rally towards 24,100.

The Bank Nifty continues to trade above key 21-day and 55-day EMAs, signaling positive momentum. Singhania suggests that a "buy on dips" strategy remains favorable for both Nifty and Bank Nifty, with key support levels at 50,600 for Bank Nifty and 23,300 for Nifty.

D-Street Trading Strategy for the Coming Week:

Experts recommend a "buy on dips" strategy, particularly focusing on sectors with sustained strength, such as banking and financials. Mishra advises caution in IT stocks, which are expected to underperform in the near term. Singhania also echoes the sentiment, stating that both Nifty and Bank Nifty are favorable for a "buy on dips" approach, as long as key support levels hold.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking firms, not Mint. We strongly advise investors to consult certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly and individual circumstances may vary.