Indian equity markets demonstrated remarkable resilience during the trading session, with the benchmark Nifty 50 staging a sharp intraday recovery to close significantly higher despite opening in negative territory. The recovery was primarily driven by positive comments from US Ambassador Sergio Gor regarding India-US trade deals, which helped lift market sentiment, along with buying interest at lower levels following five consecutive sessions of selling pressure.

Market Performance Overview

The Nifty 50 showcased impressive recovery dynamics during the session. After opening 117 points lower, the index extended its decline in early trade before finding strong support near the day's low.

All major indices rebounded over 1% from their intraday lows, with the Nifty successfully closing above the psychologically important 25,750 mark. The index sustained gains throughout the session after the initial recovery, finishing near the session's high.

Stock-Specific Performance

Nearly 40 Nifty stocks ended the session in positive territory, reflecting broad-based buying interest across various sectors.

Top Gainers:

• Coal India
• Tata Steel
• Asian Paints
• Indigo
• Trent
• Hindustan Unilever

Key Losers:

• M&M
• Eicher Motors
• ONGC

The strong performance of these leading stocks contributed significantly to the overall market recovery and helped sustain the positive momentum throughout the trading session.

Sectoral Analysis

Sectoral performance presented a mixed picture, with certain segments leading the recovery while others remained under pressure.

Midcap and smallcap indices remained largely flat during the session, indicating that the recovery was primarily concentrated in large-cap stocks. The Nifty Midcap 100 declined 0.12% while the Nifty Smallcap 100 gained 0.20%.

Economic Data and Corporate Updates

On the macroeconomic front, India's December CPI inflation rose to 1.33% year-on-year from 0.71% in November, though it remains well below the RBI's comfort level. Market participants are now awaiting US CPI data scheduled for release.

TCS results highlighted the ongoing earnings season dynamics. The IT major reported a net profit decline of 12% from the September quarter to ₹10,657.00 crore. The company faced a one-time impact of ₹2,130.00 crore due to new labor laws and made a provision of ₹1,010.00 crore towards a legal claim during the quarter.

Technical Outlook

Market analysts provided varied perspectives on the technical outlook following the day's recovery. The sharp rebound from key lower levels suggests potential for further upside movement, with the index potentially advancing towards the 26,000-26,100 zone. However, resistance in this zone could lead to renewed selling pressure, while crucial support is positioned at 25,650.

The Bank Nifty found strong support near its 50-day EMA and staged an impressive rebound, with the 59,700-59,800 zone acting as a critical hurdle going forward. A decisive move above 59,800 could trigger further upside towards 60,300 and 60,800, while immediate support is seen in the 59,000-58,900 zone.

The Nifty 50 started the week on a positive note, snapping its five-day losing streak with a smart rebound that saw the index gain 0.42% to close at 25,790 points. The recovery came after the index had declined more than 2.5% over the last four sessions of the previous week, providing much-needed relief to market participants.

Technical Pattern Signals Potential Reversal

The index demonstrated strong resilience during the trading session, opening below 25,700 and extending its downtrend to an intraday low of 25,473 before staging a remarkable comeback. The Nifty reclaimed the 100-day EMA and formed a Piercing Line pattern, which is considered a bullish reversal formation. This technical development has raised confidence among bulls, though sustainability remains a key concern.

Momentum Indicators Show Mixed Signals

Despite the positive price action, technical indicators present a cautious outlook. The RSI rebounded to 42.84 but remains well below the reference line, while the MACD continues to maintain a bearish crossover with a weakening histogram. These momentum indicators suggest that the current rebound may face challenges in sustaining higher levels.

"This is a positive indication, and one may expect further upside in the short term. The underlying trend of the Nifty seems to have turned up following the sharp weakness seen last week," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Critical Resistance at 26,000 Level

Technical analysts identify the psychological 26,000 zone as a crucial hurdle for the index. This level coincides with the 20-day EMA and the midline of the Bollinger Bands, making it a significant resistance point. Weekly options data supports this view, with maximum Call open interest positioned at 26,000.

"We remain watchful, as the Nifty faces resistance in the 26,000–26,100 zone, where selling pressure may re-emerge," noted Rupak De, Senior Technical Analyst at LKP Securities.

Bank Nifty Mirrors Broader Market Recovery

The Bank Nifty followed a similar trajectory, gaining 0.34% to close at 59,450 after touching an intraday low of 58,864. The banking index rallied nearly 600 points from its day's low, ending above the midline of the Bollinger Bands and snapping a three-day losing streak.

Volatility Gauge Signals Caution

The India VIX, which measures expected market volatility, rose 4.05% to close at 11.37, extending its uptrend for the third consecutive session. This increase in volatility suggests continued market uncertainty and provides a cautionary signal for investors despite the day's positive performance.

While the technical rebound offers hope for bulls, the combination of weak momentum indicators, rising volatility, and key resistance levels ahead suggests that market participants should maintain a cautious approach in the near term.