The Indian equity markets delivered a strong performance in the latest trading session, with the Nifty 50 climbing to a fresh all-time high of 26,340 before closing at 26,328.55, marking a gain of 182 points or 0.70%. The BSE Sensex advanced 573 points or 0.67% to finish at 85,762, as a broad-based rally took hold across sectors driven by strong corporate updates and positive earnings expectations.

Market Performance and Technical Outlook

The latest session's performance builds on the index's positive momentum, with market breadth turning decisively favorable. Currently, 73% of Nifty 50 stocks are trading above their 50 EMA, representing a sharp improvement from 52% observed earlier and indicating strengthening momentum across large-cap stocks.

According to Bajaj Broking Research, "A strong bullish candle on the daily chart has pushed the index to a fresh high of 26,340, signalling scope for further upside into uncharted territory." The brokerage noted that the benchmark's consistent trading above its key moving averages confirms the strength of its ongoing uptrend.

Analyst Outlook and Trading Strategy

Market experts remain constructive on the near-term outlook, with specific resistance and support levels identified for upcoming sessions. As long as Nifty sustains above the 26,000 mark, the near to short-term outlook remains bullish with a buy-on-dips approach favoring bulls.

"Expectations around upcoming Q3 results and supportive policy measures in the Union Budget have helped lift overall sentiment. A key factor has been improved participation in the broader market, particularly selective buying in mid-cap stocks," said Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services.

Banking Sector Performance

The Bank Nifty has maintained bullish momentum, reaching a fresh high of 60,203.75, driven by sustained strength in PSU banks. According to Amol Athawale, VP Technical Research at Kotak Securities, "For Bank Nifty, the short-term trend is positive, with 59,800 and 59,500 acting as key support zones, while 60,500-60,700 could act as crucial resistance areas for the bulls."

Market Activity and Sectoral Performance

Trading activity remained robust across segments, with several stocks witnessing significant interest from market participants. The session saw 185 stocks hitting 52-week highs, including major names like Maruti Suzuki and M&M, while market breadth remained strongly positive with 2,711 advances against 1,524 declines.

Sectoral analysis shows PSU Bank, Infrastructure, Metal, IT, Nifty Bank, and Financial Services indices remaining in the leading quadrant, with financial and energy stocks particularly driving the latest rally.

Forward Outlook

Khemka expects the positivity to continue into the following week, supported by several companies announcing their pre-quarterly business updates. The optimism around upcoming corporate earnings and strong domestic participation has lifted overall investor sentiment, with analysts maintaining a constructive view on the market's trajectory as attention turns to Q3 earnings season.

Indian equity markets closed at record highs on Friday, marking a strong start to the new year as benchmark indices tracked positive momentum across Asian markets. The rally represents the first time both major indices have hit all-time highs since late November and early December.

Market Performance Overview

The day's trading session delivered impressive gains across both major indices:

Both indices achieved their best weekly performance in seven weeks, breaking out of a prolonged range-bound phase that had characterized trading over the past two months. The Nifty50 had been trading within the 25,500-26,200 range during the final two months of the previous year, struggling to surpass its previous closing high of 26,215.55.

Sectoral Performance and Market Breadth

The rally was broad-based, with all sector indices closing higher except fast-moving consumer goods (FMCG). Key sectoral movements included:

The broader market indices outperformed the benchmarks, with Nifty Midcap 150 gaining 0.90% and Nifty Small-cap 250 rising 0.80%. Market breadth remained positive throughout the session, with 2,711 stocks advancing and 1,524 declining out of 4,371 total stocks traded on BSE.

Institutional Activity and Market Sentiment

Institutional flows supported the market rally, with both domestic and foreign investors participating actively:

Despite the record highs, the Volatility Index (VIX) rose 2.90% to 9.45 levels, suggesting traders remain cautious around the market's elevated levels. This uptick in the fear gauge indicates some underlying nervousness despite the positive price action.

Technical Outlook and Market Expectations

Market analysts suggest the breakout from the recent range-bound phase could lead to further upside momentum. Technical analysis indicates potential targets in the 26,500-26,700 range for Nifty50 if the current momentum sustains. The rally comes after a period where investors had been concerned about a declining rupee and risk-off sentiment among foreign investors.

Chemicals, IT, power, and financial sectors are expected to continue performing well in the coming months, with smaller and mid-cap stocks potentially outperforming their larger counterparts. The positive sentiment was also reflected in Asian markets, with South Korea gaining 2.30%, Taiwan advancing 1.30%, and Hong Kong rising 2.80%, while Japan declined 0.40%.