Indian equity markets concluded Monday's trading session on a negative note, weighed down by cautious global sentiment and mixed corporate earnings announcements. Market participants remained watchful of international developments and ongoing quarterly results, with analysts expecting sideways movement in the near term.

Market Performance and Technical Outlook

Technical analysis suggests the market is at a crucial juncture, with analysts monitoring key support and resistance levels. The index requires a decisive move above 25,700 to trigger meaningful short-covering towards the 25,900 zone. However, a breakdown below 25,575 could lead to further downside pressure towards 25,450 levels. While short-term pullbacks remain possible, the overall market direction depends on global cues and earnings momentum.

Volatility and Market Sentiment

Market volatility showed signs of increase as the India VIX, which measures fear and uncertainty in the markets, rose 4.00% to settle at 11.83 levels. This uptick in volatility reflects the cautious approach adopted by market participants amid mixed signals from corporate earnings and global developments.

Institutional Activity

Institutional trading patterns revealed contrasting approaches between foreign and domestic investors on Monday:

The significant selling by foreign investors was offset partially by strong domestic institutional support, highlighting the divergent views on market prospects.

Currency Movement

The Indian rupee faced pressure during Monday's session, depreciating 12 paise to close at 90.90 against the US dollar. This level positions the currency close to its record low closing levels. The weakness was attributed to robust demand for the greenback from metal importers and persistent foreign fund outflows from Indian markets.

F&O Ban List

SAIL and Sammaan Capital Live Events Securities were placed in the F&O ban period. Securities enter the ban period when they cross 95.00% of the market-wide position limit, restricting fresh positions in the futures and options segment.

Analysts expect the market to continue trading sideways in the immediate term, with participants closely tracking global developments and the ongoing earnings season. Any escalation in geopolitical tensions could serve as an additional overhang on market sentiment.

Indian equity markets navigated a narrow trading range during the truncated week, ultimately ending unchanged despite early corporate earnings announcements and persistent concerns over trade tariffs. The convergence of these factors, combined with continued Foreign Institutional Investor (FII) selling pressure, collectively weighed on market sentiment throughout the period.

Market Performance and Sectoral Movements

The benchmark indices showed mixed performance with notable sectoral rotation beneath the surface calm.

While broader market indices slipped marginally into negative territory, the technology sector demonstrated resilience with the Nifty IT index climbing 2.8%. This performance contrasts sharply with traditional sectors like Consumer Durables, Realty, and Pharmaceuticals, each declining approximately 2%.

Foreign Investment Outflows Continue

Foreign Institutional Investors maintained their withdrawal pattern from Indian equities, offloading shares worth ₹14,265.58 crore during the week. This sustained selling pressure has contributed to the overall market uncertainty and continues to influence trading sentiment across various sectors.

Technical Analysis and Market Outlook

The technical landscape reveals bearish undertones with several key indicators pointing toward continued weakness. The Nifty index remains consolidated beneath its support line, with bears maintaining control of market direction.

The market-wide Open Interest Put-Call Ratio (OI PCR) approaches the lower boundary of its typical range at 0.72. Historically, this ratio has declined to 0.66, suggesting room for additional short-term correction in broader indices. A decisive close above 26,030 would be required to confirm a price action reversal.

Sector Rotation Analysis

Significant sector rotation characterized the week's trading, with distinct performance patterns emerging across different industry groups.

Leading Sectors:

• Nifty IT continues gaining momentum with strong outperformance
• Nifty Bank and Private Bank showed turnaround in momentum
• Metal sector demonstrated significant improvements in relative strength

Weakening Sectors:

• Oil and Gas entered the weakening quadrant
• Infrastructure continues losing momentum and relative strength
• Auto sector experienced meaningful decline in relative strength

Improving Sectors:

• Financial Services returned to improving quadrant
• PSU Bank showed initial turnaround signs

Market Strategy and Outlook

FIIs currently hold a net short position of 1,90,375 contracts in index futures, representing a slight reduction from the recent high of 1,99,134 contracts. The percentage of long positions remains in single digits, reflecting exceptionally bearish sentiment among foreign investors.

Under current conditions, the market favors a sell-on-rise strategy until the Nifty index closes above 26,030. Two key short-term indicators—the market-wide OI PCR and the percentage of stocks trading above their 20-day Simple Moving Average—continue suggesting further downside potential before any sustainable recovery materializes.

The upcoming earnings announcements from several Nifty heavyweights are expected to introduce heightened volatility and potentially guide market direction in the near term. Additionally, global developments including US trade policy decisions may continue influencing domestic market sentiment.