Indian equity markets are poised for another weak session as investors continue to grapple with disappointing third-quarter earnings from major companies and escalating global trade tensions. Market indicators suggest further declines ahead, with analysts expecting sustained pressure on benchmark indices amid mixed corporate results and persistent foreign fund outflows.

Market Outlook and Early Indicators

Gift Nifty indicates that the Nifty could lose approximately 150 points at the opening on Monday, reflecting continued negative sentiment despite the weekend break. Domestic markets are likely to maintain their negative bias as geopolitical tensions continue to escalate and key index heavyweights report below-expectation quarterly results.

Previous session data showed the BSE Sensex declining 300 points to 83,270.65, while the NSE Nifty 50 dropped below the crucial 25,600 level to close at 25,585.60.

Corporate Earnings Disappointment

The market sentiment has been significantly impacted by underwhelming third-quarter results from three key index constituents. Reliance Industries, HDFC Bank, and ICICI Bank have all delivered results below market expectations, contributing to the overall pessimistic outlook.

Analysts expect the market to remain under pressure as participants digest these results and their implications for broader sectoral performance. The underperformance has been particularly pronounced in banking and conglomerate stocks.

Foreign Investment Outflows

Foreign Portfolio Investors have maintained consistent selling pressure throughout January, with total outflows reaching ₹22,529 crore up to January 16. This sustained selling has been a major drag on small and mid-cap stocks, with FIIs being net sellers on all days except one during the month.

The underperformance of India compared to other major markets has continued into 2026, with elevated valuations and poor earnings growth being the principal reasons for this tepid performance.

Analyst Perspectives and Market Drivers

Market experts highlight multiple factors contributing to the current weakness. "Volatility is likely to stay elevated as Q3 earnings announcements coincide with global macro and geo-political headlines," said Ponmudi R, CEO of Enrich Money. While steady DII inflows could cushion declines, the near-term direction remains highly sensitive to FII flows and external cues.

The upcoming week is expected to be data-heavy and crucial for short-term market direction, with participants focusing on earnings from key heavyweights and various economic indicators including PMI readings and banking sector data.

Global Context and Future Outlook

Geopolitical developments and trade negotiation updates continue to influence market sentiment, with US macroeconomic data and currency movements adding to the complexity. Despite current challenges, HDFC MF's Yearbook 2026 suggests that the year could shape up as favorable for India, with strong growth prospects and easing global risks potentially creating opportunities in metals, BFSI, capital goods, and defense sectors.

Indian equity markets concluded Friday's trading session on a positive note, with both benchmark indices registering gains despite profit booking in the final hours. However, technical analysts emphasize that chart patterns across timeframes reflect indecision and rising volatility, suggesting exhaustion of the recent corrective phase rather than a clear trend reversal.

Market Performance Overview

The trading session witnessed substantial intraday momentum before settling at modest gains. Key market movements included:

The Sensex surged as much as 752 points during the day, while the Nifty climbed 0.80% to reach its intraday peak, demonstrating strong investor appetite before profit booking emerged near the crucial 25,900 resistance level.

Technical Analysis and Critical Levels

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the Nifty attempted to sustain higher levels on Friday but selling pressure near 25,900 stymied the recovery attempt. The index remains rangebound with clear technical parameters:

Mehul Kothari from Anand Rathi emphasizes that the Nifty continues to hold firmly above the key 25,400 support, which remains a strong demand zone. "Only a decisive breakout above 25,900 can trigger a sustained upside move," Kothari noted.

Chart Pattern Analysis

Sacchitanand Uttekar, VP Research at TradeBulls Securities, highlights that the recovery from 25,430 support formed a bullish Hammer on the daily chart, while the weekly chart printed a Spinning Top, signalling indecisiveness. The analyst notes that both patterns indicate exhaustion of the corrective phase within the 25,880-25,430 band.

Trading Strategies and Recommendations

Analysts recommend cautious approaches given the rising volatility environment. Key trading strategies include:

For Nifty Breakout Above 25,900:

• Buy Nifty February futures around 26,100
• Consider Nifty 26,100 CE of February 24 expiry around ₹350-400
• Bull Call Spreads may be favorable

For Breakdown Below 25,400-25,500:

• Short Nifty February futures around 25,700
• Bear Put Spreads could present opportunities

Top Stock Recommendations

Analysts have identified several stocks with strong technical setups:

Market Outlook

The broader trend remains choppy with volatility picking up significantly. Analysts suggest that sharp moves cannot be ruled out once the current range resolves. Bank Nifty continues to remain in a 'long-only' mode, with potential to move towards the 60,600-60,850 zone as long as key supports above 59,710 remain intact.

Traders are advised to wait for directional confirmation before deploying aggressive strategies, with the 25,880-25,900 zone serving as the critical battleground for determining the market's next major move.