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

D-Street Ahead: The Indian stock market concluded the week on a subdued note after investors grappled with global uncertainties and awaited key domestic developments. Foreign investors sold Indian shares in three of the last four sessions.

Domestic equity benchmarks Sensex and Nifty 50 were volatile, oscillating within a narrow range before closing marginally lower. The Nifty settled at 24,853.15, while the Sensex ended at 81,721.08, reflecting cautious investor sentiment.

Indian stock market's performance last week

On a weekly basis, the BSE benchmark dropped 609.51 points or 0.74 per cent, and the Nifty declined 166.65 points or 0.66 per cent. Hence, the Nifty and Sensex ended the week down about 0.7 per cent each, after a four per cent rally in the prior week.

Nine of the 13 major sectors logged losses for the week, which saw mixed sectoral performance. Realty and metal sectors were top performers for the second consecutive week, while auto, IT, and FMCG sectors edged lower.

On the domestic front, analysts said mixed corporate earnings and delays in finalising the India-US trade agreement added to the uncertainty, prompting profit-booking and a guarded stance among market participants.

Among broader indices, the smallcap segment managed to gain nearly half a per cent while mid-caps shed 0.7 per cent. On the thematic front, select stocks in the defense space continued to attract buying interest.

Sensex, Nifty, and Bank Nifty technical levels to watch

According to Ajit Mishra, SVP, Research, Religare Broking, the Nifty 50's inability to sustain levels above 25,200 suggests that the index is undergoing a consolidation phase, with immediate support around 24,500, near its short-term moving average (20-DEMA). A breach below this level could lead to further downside toward 24,100, potentially derailing the prevailing positive trend.

"On the upside, a decisive breakout above 25,200 could reignite bullish momentum and pave the way toward the 25,600 level," added Mishra. According to Puneet Singhania, Director at Master Trust Group, Nifty ended the week with minor losses, closing below the 25,000 mark after testing the previous week’s low and the 21-day EMA, which acted as crucial support.

"The index is holding above key moving averages, supporting the uptrend. Strong support lies at 24,500, a previously tested demand zone. If this level breaks, Nifty may drift lower toward 24,200. On the upside, resistance is seen at 25,000. A decisive move above this level could lead to a rally toward 25,300," said Singhania.

Bank Nifty traded with high volatility throughout the week but managed to end flat, showing resilience near key support levels. “The index took support from its 21-day EMA and has consistently traded above this level, which is currently near the 54,600 mark,” said Singhania.

The index is currently at the upper edge of the trading range, showing strong momentum. Key support is placed between 54,600 and 54,500, offering a good zone for dip buying. On the upside, 55,700 is the next resistance. A sustained move above this level could trigger a sharp rally toward 56,200.

Religare's Ajit Mishra maintains his view that the banking index holds the key to the next directional move in the Nifty. “The index has spent over a month consolidating within a tight range while holding firmly above its short-term support around 54,600 (20-DEMA). A breakout above 56,000 could provide the necessary thrust to test the 57,500 level,” he said.

D-Street trading strategy for next week

Ajit Mishra of Religare Broking recommends maintaining a positive bias unless the Nifty decisively breaks below the 24,500 mark, with a continued focus on stock selection. Preference must be given to sectors such as banking, financials, energy, metals, and realty, while remaining selective in others.

“Traders are advised to maintain strict stop-loss levels and stay prepared for heightened volatility. Keeping abreast of global developments and key domestic policy announcements will be essential in navigating the markets in the weeks ahead,” added Mishra on the coming week's strategy.

On Nifty 50's strategy, Puneet Singhania of Master Trust Group said positional traders can look to buy on dips near support. For Bank Nifty, he suggests the setup remains positive, and traders can look to buy on dips.

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.