The Nifty appears to be stabilising near key support levels as markets enter the new year, with technical indicators suggesting a potential medium-term breakout opportunity. Rohit Srivastava, Founder of Strike Money Analytics and Indiacharts, has identified crucial levels that could determine the index's near-term direction.

Key Technical Levels for Nifty

Srivastava highlighted that the index has formed multiple bottoms near the 25,800 zone, indicating strong support at this level. "This could be yet another base formation. From here, the Nifty should attempt a move towards the trendline resistance around 26,500, which has capped rallies since October and November," he explained during his interaction with ET Now.

Medium-Term Breakout Scenario

The technical analyst believes that a decisive breakout above 26,500 would signal a shift to a stronger medium-term uptrend. "If we manage to break and sustain above this level, the index can head meaningfully higher. Even if there is some interim pullback, the broader structure suggests that 26,500 will eventually be crossed," Srivastava noted. For now, the bias remains positive, with the market attempting to move higher from current levels as the new trading series begins.

Sectoral Performance Review for 2025

Reflecting on sectoral performance in 2025, Srivastava emphasized that the year's story extended beyond just PSU banks, despite their leadership position. The performance data reveals a broader trend among rate-sensitive sectors.

According to Srivastava, the common driver behind these outperformers was aggressive interest rate cuts by the RBI under the new governor, which benefited rate-sensitive sectors such as banking, metals and automobiles. Within the financial space, PSU banks and NBFCs clearly outperformed large private banks throughout 2025.

Outlook for Next Rally Phase

For the Nifty to decisively move beyond 26,500, Srivastava stressed the importance of broader sector participation. "Autos, metals and PSU banks have done the heavy lifting. For the next leg of the rally, other sectors will need to join in—and I believe that will eventually happen," he added. The trend of PSU banks and NBFCs outperforming largecap banks has remained strong, and according to the analyst, this pattern is unlikely to reverse suddenly.

With the Nifty holding above crucial support levels and leadership from rate-sensitive sectors remaining intact, the technical setup suggests a cautiously optimistic outlook for the broader market.

The Indian stock market concluded 2025 with the Nifty achieving a historic milestone of 10 consecutive winning years, gaining 10.50% despite navigating through challenging global conditions including India-Pakistan tensions, Trump tariffs, and rupee depreciation beyond 91 against the dollar.

Market Performance Overview

The benchmark indices delivered moderate gains while individual stocks and sectors showed dramatic variations. The NSE Nifty 50's performance was supported by strong rallies in financials and automotive sectors, even as small-cap stocks declined 6.00%.

Top Nifty 50 Winners and Losers

Among Nifty 50 constituents, financial services and automotive stocks dominated the winners' list, while retail and technology stocks faced significant pressure.

Broader Market Performance

The mid-cap and small-cap segments exhibited even sharper contrasts, with some stocks delivering exceptional returns while others faced steep declines.

In the Nifty Midcap 100, L&T Finance surged 131.00%, Aditya Birla Capital doubled with 100.00% gains, and AU Small Finance Bank jumped 80.00%. Conversely, Oracle Financial Services plunged 40.00%, Premier Energies declined 37.00%, and Kalyan Jewellers fell 36.00%.

Sectoral Performance Analysis

Sectoral trends revealed clear winners and laggards, with traditional sectors outperforming technology and consumer discretionary segments.

Market Resilience and Structural Factors

Despite facing substantial foreign institutional investor selling of approximately $18.00 billion, domestic investor participation remained robust with SIP flows reaching ₹3.20 lakh crore during the calendar year.

"That is an exceptionally rare feat in markets. Typically, markets have a negative year every third year or so," said Sunil Sharma, Chief Investment Strategist at Ambit Global Private Client. "This data point highlights India's consistent, structural growth, continual reform mindset of the government, the strong demographics of the country, as well as the financialization trend driving ever-rising flows into the markets."

Looking Ahead

Market consensus suggests optimistic targets for 2026, with leading brokerages setting Nifty targets around 29,000 levels. However, experts advise maintaining focus on quality companies with strong fundamentals at reasonable valuations rather than chasing speculative returns, particularly given the mixed performance across market segments in 2025.