The ongoing volatility in Indian equities reflects market sentiment rather than structural weakness, with the benchmark index trapped in a prolonged consolidation phase, according to HDFC Securities' senior analyst. Vinay Rajani, AVP and Senior Technical & Derivative Analyst at HDFC Securities, emphasized that current market conditions stem from indecision rather than fundamental deterioration.

Nifty Locked in Extended Consolidation

The benchmark index has demonstrated remarkable consistency in its range-bound behavior, remaining within defined parameters for five consecutive weeks. Rajani highlighted the market's inability to establish clear directional momentum despite multiple breakout attempts.

"The market is not finding any momentum or clear direction. This consolidation phase has continued despite multiple attempts to break out," Rajani explained. He noted that the 50-day exponential moving average near 25,834 has emerged as a crucial support level, with the index experiencing two sharp reversals from this zone in December alone.

Market Breadth Concerns Persist

While acknowledging current market challenges, Rajani pointed to weak advance-decline ratios as a near-term concern indicating poor market breadth. However, he contextualized this weakness within typical consolidation behavior patterns. "That is a concern, but consolidation phases often see poor breadth. A reversal can still happen anytime," he stated, noting that selective stocks continue demonstrating strength despite lacklustre index performance.

Critical Levels for Market Direction

Rajani outlined specific technical levels that traders should monitor for potential market direction changes. The 25,700 level on a closing basis represents the key threshold for maintaining upside potential.

"As long as 25,700 holds, the possibility of an upside reversal remains intact. A decisive move above 26,150 would be an early signal of renewed bullishness," he advised. The analyst recommended maintaining long positions with strict stop losses positioned near the lower end of the established range.

Selective Stock Opportunities

Despite broader market uncertainty, Rajani identified specific stocks showing technical strength and fresh breakout potential:

Jindal Stainless has demonstrated resilience during market declines while showing fresh breakout patterns with rising volumes.

UPL continues outperforming the broader chemical sector while trading near all-time highs.

Strategic Approach for Current Market

Rajani emphasized the importance of patience and disciplined approach during the current market phase. "Momentum is missing, but consolidation itself is not bearish. Traders should stay selective, respect key levels, and focus on stocks showing relative strength rather than chasing the index," he concluded. The analyst's assessment suggests that while immediate momentum remains elusive, the market structure does not indicate fundamental deterioration, supporting a selective investment approach focused on technically strong individual securities.

As Indian equity markets grapple with muted momentum and the Nifty struggles to decisively reclaim the 26,000 mark, investors face critical questions about timing and sector leadership. Speaking to ET Now, Ashi Anand, Founder & CEO of IME Capital, offered insights that tie market direction firmly to economic and earnings fundamentals while highlighting intensifying competition in new-age consumption themes.

Small and Midcap Recovery Requires Broader Market Momentum

Anand cautioned against premature optimism regarding the revival of small and midcap stocks. He emphasized that these segments cannot recover in isolation, stating that overall market momentum and corporate earnings improvement must come first. Investors are closely tracking the ongoing results season for early signs of an earnings turnaround across sectors.

According to Anand, clarity on macro variables—particularly the contours of the US-India trade deal—remains a critical missing piece. Without this visibility, expecting an early surge in the broader market may be unrealistic.

Cautious Optimism for 2026 Market Momentum

Addressing broader market momentum, Anand expressed measured confidence about 2026 prospects. He noted that after two years of strong performance, markets have been digesting a slowdown in economic growth and corporate earnings, compounded by global uncertainties.

However, the groundwork for recovery appears to be taking shape. Anand pointed to several policy measures rolled out over recent months as potential catalysts:

• Income tax cuts in lower slabs
• GST rationalization
• Interest rate cuts
• Easing stress in the banking sector

These factors could help revive consumption and support market recovery. Anand observed that parts of the market previously under strain are showing signs of improvement as the economy moves into 2026.

Zepto IPO Highlights Quick Commerce Competition

Beyond macro considerations, investor attention is focused on the quick commerce segment, particularly with Zepto's proposed IPO. Anand described the listing as one that will be closely watched from both valuation and competitive standpoints.

Unlike peers such as Swiggy, which straddle food delivery and quick commerce, Zepto represents a pure-play bet on rapid delivery—a business growing faster but still deep in investment mode. Anand characterized quick commerce as "possibly the most interesting land grab" available, highlighting the massive opportunity as traditional commerce increasingly shifts toward instant delivery models.

Competition is expected to intensify significantly, with incumbents sitting on strong cash balances and major players like Amazon and Flipkart maintaining their presence in the space.

Focus on Scale Over Short-term Profitability

Importantly, Anand pushed back against excessive focus on near-term profitability in the quick commerce sector. He argued that companies should continue investing and growing even at the cost of short-term profitability, as scale and positioning today will determine the eventual winners.

For portfolio decisions regarding Zepto, Anand indicated that relative valuations and clearer disclosures will be crucial as the company moves closer to listing. With many key metrics still awaited, more definitive investment judgments will follow once additional data becomes available.

Market Strategy: Patience and Selectivity

As markets appear to be in a waiting phase, balancing early signs of recovery against the need for sustained earnings momentum, Anand's analysis suggests that patience and selectivity may remain the dominant investment strategy. The path forward depends largely on earnings recovery clarity and resolution of key macro uncertainties, particularly around trade relationships and policy implementation.