The benchmark Nifty 50 index stands at a critical technical juncture as traders prepare for the weekly expiry session, with analysts suggesting a cautious approach amid mixed market signals. After experiencing a sharp 900-point decline over five sessions, the index is showing signs of buying demand from oversold territory, presenting both opportunities and challenges for market participants.

Technical Analysis and Key Levels

From a technical perspective, the Nifty 50 faces significant resistance levels that could determine its near-term direction. According to Osho Krishan, chief manager of technical and derivative research at Angel One, the 50-Double Exponential Moving Average at 25,900 is expected to serve as an intermediate hurdle.

Shrikant Chouhan, head of equity research at Kotak Securities, identifies 25,650 and 25,600 as key support zones, while 25,900-25,950 could serve as immediate resistance areas. A decisive breakthrough above the 26,000 mark, which coincides with the 20-DEMA, could reignite bullish sentiment in upcoming sessions.

Banking Sector Outlook

The Nifty Bank index is expected to continue its consolidation phase within a defined range. Analysts at Bajaj Broking anticipate the banking index to remain within the 58,700–60,000 range in the near term.

The support zone at 59,000–58,700 represents a confluence of the 50-day exponential moving average and the previous month's low, making it a crucial level for market participants to monitor.

Market Performance and Foreign Investment Flows

Indian equity markets demonstrated resilience on Monday, recovering from intraday lows following improved investor confidence. The recovery was attributed to favorable comments from the new US Ambassador regarding a potential trade deal ahead of upcoming negotiations.

In the broader market segments, midcap stocks ended flat while the small-cap index declined by 0.50%. However, Foreign Portfolio Investors continued their selling pressure, marking the sixth consecutive session of outflows with net sales of ₹3,638.40 crore according to provisional data from the National Stock Exchange.

Trading Strategy and Market Outlook

Given the current technical setup and market conditions, analysts recommend a buy-on-dips and sell-on-rallies approach for day traders. The index's position in extreme oversold territory after the recent decline suggests potential for tactical buying opportunities at lower levels, while resistance levels provide natural profit-booking zones for short-term traders.

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.