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.

Indian equity markets are positioned for a cautious start to the week amid mixed earnings trends, with banking sector strength offsetting continued pressure on IT stocks, according to market expert Nischal Maheshwari. Speaking to ET Now, Maheshwari indicated that near-term market direction is being driven more by sector-specific earnings and valuations rather than broad-based structural weakness.

IT Sector Faces Headwinds While Banking Shows Resilience

Maheshwari observed that IT results have largely met or fallen short of expectations, with limited visibility on demand recovery. "There is no clear positive outlook coming from IT earnings declared so far," he stated. In contrast, banking results have demonstrated stronger performance, despite one-time provisions related to priority sector lending norms at large private lenders.

According to Maheshwari, core banking performance remains healthy with improving net interest margins and clear guidance on growth over the next few quarters. He noted that valuations for large private banks appear attractive, as many frontline names have delivered muted stock returns over the past 12-18 months.

Smaller Banks and PSU Lenders Expected to Lead

The market expert believes smaller private banks are currently benefiting from momentum and favorable valuations, positioning them to outperform larger peers in the short term. Within the banking sector, he expects PSU banks to lead initially over the next couple of quarters, followed by a catch-up in large private sector lenders as earnings visibility improves.

Metals Rally Continues Amid Geopolitical Factors

Regarding metals, Maheshwari noted that prices have experienced a sharp rally over the past quarter and could continue rising in the near term. However, he cautioned that the rally appears partly driven by financial flows into hard assets amid geopolitical uncertainty and reduced confidence in the dollar, rather than strong revival in physical demand. China's manufacturing recovery remains a key variable to monitor.

Real Estate Demand Remains Strong Despite Valuation Concerns

The real estate sector continues to demonstrate robust on-ground demand, particularly in major markets including Mumbai, Bengaluru, and Delhi NCR. Strong order bookings and deliveries support the sector's fundamentals, though elevated valuations have led to stock-level corrections and consolidation.

NBFCs and Infrastructure Stocks Gain Attention

Maheshwari remains constructive on NBFCs, citing easing funding costs and benign credit conditions. He expects performance to broaden beyond gold-focused lenders during the year. In infrastructure, select capital goods and power equipment players appear attractive after sharp corrections, particularly those gaining traction in data center and export-linked opportunities.

2026 Investment Themes Focus on Banking and Metals

Looking ahead to 2026, Maheshwari identifies banking as a well-established growth theme, while metals could continue to surprise on the upside as global investors increase allocation to real assets amid persistent geopolitical risks. The market expert expects sector rotation to continue, with investors favoring value, earnings visibility, and balance-sheet strength over high-growth but uncertain segments.