D-Street Ahead: How will Indian stock market move in first week of FY26? Key technical levels for Nifty, Sensex

D-Street Ahead: The Indian stock market remained range-bound last week, closing with modest gains as they digested the sharp rebound from the previous week. The initial positive momentum was met with profit-taking in subsequent sessions, limiting further upside. By the end of the week, domestic equity benchmarks—Nifty and Sensex—closed at 23,519.30 and 77,414.92, respectively.

Overall, the frontline indices extended their winning streak for the second consecutive week, with the NSE 50 and 30-share BSE index initially surging to an 11-week high before paring gains over profit booking at higher levels. The indices recorded a weekly gain of approx 0.70 per cent. Notably, the Bank Nifty outperformed, advancing nearly two per cent to end the week at 51,564.81.

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Indian stock market's performance last week

Resurgence in foreign investor interest played a crucial role in supporting the markets, as evidenced by increased buying in the cash segment and short-covering in derivatives. Volatility persisted over ongoing speculation regarding US tariffs, which impacted global sentiment and tempered momentum in domestic markets.

Sector-wise, banking and financials continued to outperform, providing stability, whereas pharma, auto, and realty witnessed some profit booking. Thematic plays like defense and public sector undertakings (PSUs) remained in focus, along with sustained participation in midcap and smallcap stocks.

Financial stocks led the rally, reinforcing their position as the largest contributors to the Nifty 50’s performance. Additionally, the Nifty PSE and FMCG sectors emerged as top gainers, while media and pharma sectors lagged.

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Sensex, Nifty, and Bank Nifty technical levels to watch

Nifty continues to consolidate within a narrow range of 23,400-23,800, while staying above key support levels marked by the 100- and 200-day exponential moving averages (DEMA). “A decisive breakout could open the door for a rally towards 24,100, whereas a breakdown may extend the consolidation phase, with the next major support at 23,100,” said Ajit Mishra – SVP, Research, Religare Broking.

"The banking index outperformed the broader market, posting nearly two per cent gains amid consolidation. The 50,700 level, which previously acted as resistance, has now turned into a key support. The index is expected to gradually move towards 52,800, with 53,900 as the next upside target," said Mishra.

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"Nifty surged 6.3 per cent for the month, reversing the previous month's decline and closed on a strong positive note, supported by consistent foreign inflows. The index formed a bullish engulfing candle on the monthly chart, reinforcing its upward momentum," said Puneet Singhania, Director at Master Trust Group.

“The daily RSI remains above the 14-day SMA, further confirming bullish sentiment. Strong support is placed at 23,300, and if breached, the index could decline toward 23,000. On the upside, resistance is seen at 23,800, and a breakout above this could drive Nifty towards 24,100, potentially extending the rally,” added Singhania.

Bank Nifty index is trading above the key 21-day and 55-day EMAs, indicating a positive trend. The RSI is above the 14-day EMA, reinforcing bullish momentum. Prices are sustaining above the double-bottom breakout pattern, visible on the weekly chart, further strengthening the positive outlook.

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“Key support is placed at 50,600, which aligns with the neckline of the breakout. If this level is breached, downside pressure may emerge towards 50,000. On the upside, resistance is at 52,000, and a breakout above this level could trigger a rally toward 52,600,” said Singhania.

D-Street trading strategy for next week

Strategy: Buy on Dips

According to Ajit Mishra of Religare Broking, traders should maintain a ‘buy on dips’ strategy, prioritizing sectors with sustained strength. "Banking and financial stocks remain our top picks, while selective opportunities can be explored in other sectors and broader market,” said Mishra. However, caution is advised in IT stocks, which signal potential underperformance in the near term.

The Nifty 50 index is currently trading above the key 21-day and 55-day EMAs indicating a strong bullish trend and making it favorable for a "buy on dips" strategy," said Puneet Singhania of Master Trust Group. "For Bank Nifty, the trend remains favorable for a "buy on dips" approach," added Singhania.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.