Indian equity markets faced significant volatility on Monday as geopolitical concerns weighed on investor sentiment. The Nifty reached a fresh peak of 26,373.20 during the session before witnessing profit-booking toward the close, ending at 26,250.30, down 0.30%. The decline was primarily attributed to concerns over US military strikes against Venezuela carried out over the weekend.

Technical Outlook Remains Bullish

Despite Monday's decline, market analysts maintain a positive near-term outlook for the Nifty. The index continues to trade well above its key moving averages, confirming the strength of the ongoing uptrend following last week's strong upward movement.

According to Shrikant Chouhan, Head Equity Research at Kotak Securities, key support levels lie between 26,150 and 26,100, while immediate resistance is positioned at 26,350 and 26,400. "The intraday market texture is volatile; hence, level-based trading would be the ideal strategy for day traders," Chouhan noted.

Bank Nifty Shows Resilience

The Bank Nifty demonstrated strength by touching a record high during opening trade before profit-booking at elevated levels led to marginal losses. Bajaj Broking Research highlighted that a follow-through strength above Monday's high of 60,437 could open further upside toward 60,700 initially, followed by 61,400 levels from a short-term perspective.

On the downside, immediate support for Bank Nifty is placed at 59,500 levels, while key short-term support lies at 59,000-58,800 levels.

Market Performance and Broader Trends

The session reflected mixed sentiment as optimism over healthy third-quarter business updates from financial and other companies was tempered by caution surrounding geopolitical developments. In the broader market, the Nifty Midcap100 ended 0.20% lower, while the Nifty Smallcap100 outperformed with a gain of 0.50%.

Bajaj Broking Research observed that the index has formed a small bearish candle, signaling consolidation at all-time highs after the previous week's strong upward movement. However, the technical structure remains supportive of further gains.

Trading Strategy and Outlook

Market experts recommend maintaining a cautious yet opportunistic approach in the current environment. Rajesh Bhosale, Equity Technical Analyst at Angel One, advised traders to "maintain a stock-specific and thematic approach to capture outperformance." He emphasized the importance of monitoring global and geopolitical developments closely, as they may drive short-term volatility in the markets.

The consensus among analysts suggests that while near-term volatility may persist due to external factors, the underlying technical structure supports a bullish outlook for Indian equities, particularly if key resistance levels are decisively breached.

The Nifty achieved a fresh milestone by touching a record high of 26,373.20 during Monday's session but failed to sustain the momentum, closing lower at 26,250.30, down 78.25 points or 0.30%. The BSE Sensex also hit an all-time high of 85,883.50 before settling at 85,439.60, declining 322.40 points or 0.40%.

Market Performance Amid Global Rally

Despite upbeat cues from Asian markets, Indian indices struggled to hold gains. Asian markets rallied strongly, with Taiwan surging 2.60%, South Korea advancing significantly, and Japan climbing 3.00%. China added 1.40% while Hong Kong ended marginally higher. However, Indian markets witnessed profit-taking at higher levels after the record-breaking session.

Sectoral Performance and Key Movers

The Nifty IT index emerged as the biggest sector loser, declining 1.40%. HCL Technologies and Infosys dropped over 2.00% each. HDFC Bank's 2.30% decline contributed significantly to the index fall, continuing concerns despite strong business updates. Broader market performance remained mixed, with 1,672 stocks advancing and 2,603 declining out of 4,471 traded on the BSE.

Strong Q3 Business Updates Across Sectors

Despite market volatility, most third-quarter business updates demonstrated robust fundamentals:

Technical Outlook and Key Levels

Analysts maintain a bullish outlook despite Monday's decline. Nilesh Jain of Centrum Broking expects the Nifty to rise to 26,800 levels, emphasizing that the undertone remains positive. The Volatility Index (VIX) climbed 6.10% to 10.02, up from an all-time low of 9.00, making the pullback anticipated.

Market Flows and Geopolitical Factors

Foreign Portfolio Investors sold shares worth ₹36.30 crores on Monday, while domestic institutions bought ₹1,764.07 crores. FPIs have offloaded ₹3,077.10 crores in January so far. Gaurav Sharma of Globe Capital noted that markets did not react significantly to US-Venezuela geopolitical concerns as crude oil prices remained stable, with Brent crude futures rising just 0.40% to $61.10 per barrel.