D-Street Ahead: How will Indian stock market move next week? Key technical calls for Nifty, Sensex

D-Street Ahead: The Indian stock market extended their recovery for yet another week, yet limiting their weekly gains, weighed by broad-based sectoral losses and investor anxiety over geopolitical tensions following the militant attack in Kashmir's Pahalgam. This came after a phase of consolidation.

Domestic equity benchmarks Sensex and Nifty 50, extended their winning streak for the second straight week. Experts said worries over growing geopolitical tensions after Tuesday's Pahalgam terror attack weighed on market sentiment.

Indian stock market's performance last week

After an initial surge, the benchmarks traded in a narrow range through the middle of the week, before witnessing profit-taking in the final session. Ultimately, the Nifty 50 index fell 0.86 per cent to 24,039.35 while the BSE Sensex lost 0.74 per cent to 79,212.53.

Both benchmarks rose 0.8 per cent each this week. IT index jumped 6.6 per cent to log their best week since June 7, 2024. The broader, more domestically-focussed small-caps and mid-caps lost 2.5 per cent each, after investors turned risk-averse after an attack on tourists in Kashmir's Pahalgam killed 26 people and heightened geopolitical tensions.

Sector-wise, the sharp rebound in the IT sector stood out as a key driver. Additionally, the auto, pharma, and real estate sectors also posted gains. Conversely, financials and fast-moving consumer goods (FMCG) sectors ended the week in the red.

All sectoral indices except for IT index closed in the red while midcap and smallcap indices dropped more than two per cent due to profit taking. Analysts attributed the sharp gains in the IT index to better-than-feared earnings outlook by software companies as well as hopes of easing trade tensions.

Sensex, Nifty, and Bank Nifty technical levels to watch

The Nifty 50 saw a 0.79 per cent rise, marking its second consecutive gain, signaling a positive market trend. The index closed above the key psychological level of 24,000, a significant technical barrier. Nifty continues to trade above the 21-day, 55-day, and 200-day exponential moving averages, suggesting sustained bullish momentum.

Gains were primarily fueled by strong performance in banking stocks. “The RSI remaining above the 14-day SMA indicates ongoing strength. Immediate support levels are placed at 23800 and 23500 which also align with the 21DEMA. On the upside, resistance is seen at 24360, and a move above this may open the path toward 24700.,” said Puneet Singhania, Director at Master Trust Group.

Technically, D-Street experts also said that the Nifty 50's sharp rebound over the past three weeks has been almost vertical, suggesting the possibility of some consolidation before the next major directional move. It will be crucial for the Nifty to hold the 23,800 level to maintain its bullish bias.

“A breach could lead to extended profit-taking, with the next major support seen near 23,400—where key moving averages such as the 20-day, 100-day, and 200-day EMAs converge. On the upside, a decisive breakout above 24,400 could re-ignite bullish momentum, potentially propelling the index toward the 24,800 mark,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.

Bank Nifty hits a fresh all-time high of 56,098.70 this week, closing the week with a 0.69 per cent gain, reflecting strong bullish momentum. The index remains firmly above its 21-day and 55-day exponential moving averages, indicating a sustained uptrend.

This rally has been driven by strong performances from heavyweight stocks, including HDFC Bank, ICICI Bank, and Kotak Bank, which all hit record highs. "The next key resistance lies near the psychological level of 55,000, with potential for a rally towards 56,000. On the downside, 54,100 is a crucial support level, and a breach could lead to a decline toward 53,300," said Singhania.

"Rate-sensitive sectors, particularly banking and financials have played a pivotal role in the recent market uptrend. While some consolidation may be seen in the banking index, the broader tone remains optimistic. In case of further correction, buying interest is expected to emerge around the 52,800–53,700 zone, with an upside potential toward 55,500–57,000," added Mishra.

D-Street trading strategy for next week

In the current scenario, Ajit Mishra advises to maintain a positive yet cautious approach, with a preference for hedged positions in the index. “Stock-specific opportunities are likely to remain abundant on both the long and short sides. Hence, the focus should be on identifying stocks with favorable risk-reward setups,” he added.

Puneet Singhania said on Nifty 50, “A buy-on-dips approach is considered favorable though caution is advised with potential market volatility.” However, for Bank Nifty he added, “The overall technical setup supports a 'buy on dips' strategy.”

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.