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

D-Street Ahead: The Indian stock market remained range bound and logged a weekly loss dragged by concerns of an escalating global trade war and foreign capital outflow, which further dampened hopes of a sustained market recovery.

However, positive domestic data, including lower inflation figures and improved industrial output, provided some respite, along with stability in crude oil prices following a recent decline. Domestic benchmark indices, Nifty 50 and Sensex, settled with losses of over half per cent at 22,397.2 and 73,828.91, respectively.

The 30-share BSE Sensex reversed its early gains to close lower by 200 points on Thursday, marking its fifth session of losses due to selling in realty, IT and auto counters. The NSE Nifty fell 73.30 points or 0.33 per cent to settle at 22,397.20.

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Indian stock market's performance last week

The 30-share BSE Sensex declined by 200.85 points or 0.27 per cent to close at 73,828.91 with 22 of its constituents ending lower and eight with gains. The index opened higher and hit a high of 74,401.11 in the late morning session. However, it failed to hold onto gains due to persistent selling in some blue-chips and shed 259.17 points or 0.35 per cent to hit a low of 73,770.59 later.

The Nifty 50 fell 0.69 per cent in the holiday-shortened week to 22,397.2, while the Sensex lost 0.68 per cent to 73,828.91. On Thursday, the indexes fell about 0.3 per cent each, their third straight day of loss. The blue-chip indexes had jumped two per cent in the previous week, marking their best performance in three months.

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Investor sentiment was weighed down by escalating trade tensions, which pose a risk to global economic recovery. Concerns over persistent foreign fund outflows and the potential repercussions of US tariffs on India Inc dampened market confidence, raising uncertainty over earnings.

On the sectoral front, most indices ended in the red, with IT, auto, and realty among the biggest losers. Financials and pharma, however, managed to hold their ground. Broader markets also bore the brunt of selling pressure, with midcap and smallcap indices losing between 2.15 per cent and four per cent.

IT companies, which get a substantial portion of revenue from the US, were the worst hit this week as the index tumbled 4.5 per cent. Infosys, Wipro and L&T Technology Services slid 6.3 per cent, 7.3 per cent and 9.2 per cent, respectively, during the week. The market capitalisation of BSE-listed firms declined by ₹1,71,623.67 crore to ₹3,91,12,994.41 crore ($4.49 trillion).

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“Shortened trading week and sell-off in the US short market are providing a hiccup to the global market. However, India is withstanding with resilience and healthy outperformance, by a narrow negative trend,” said Vinod Nair, Head of Research, Geojit Financial Services.

"Even concerns that the US may have to bear a recession are not impacting the Indian market due to signs of recovery in fundamentals led by moderation in inflation, future rate cuts, and improvement in the economy in FY26 led by government spending and improvement in consumer income. However, if US policy continues to be tepid, it will become a point of concern," added Nair.

Sensex, Nifty, and Bank Nifty technical levels to watch

Amol Athawale, VP-Technical Research, Kotak Securities said Nifty/Sensex are finding support near 22,300/73,300, while profit booking has been witnessed between 22,600/74,700 and 22,650/74,900. He believes that the market texture is non-directional, and traders may be awaiting a breakout in either direction. 

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"For the bulls, the key breakout zone is at 22,650/74,900. A dismissal of the 22,650/74,900 breakout could push the market towards 22,800-22,900/75,500-75,800. Conversely, if the market falls below 22,300/73,300, selling pressure will accelerate. Below this level, the market could retest 22,100-22,000/72,700-72,400," said Athawale.

"Nifty remains in a consolidation phase, trading within a tight range of 22,250 to 22,650. A decisive breakout could drive the index towards 23,100 or higher, while a breakdown may lead to a retest of 21,800," said Ajit Mishra – SVP, Research, Religare Broking Ltd.

According to Puneet Singhania, Director at Master Trust Group, the Nifty 50 closed negative this week and is currently trading above its 100-week EMA, which is near 22,000, while remaining below the 21-day EMA. 

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"This suggests a "sell on rise" market sentiment. The RSI is also trading below its 14-day SMA at 38, indicating weak momentum. Immediate support is at 22,300, and a breach below this level could trigger further selling towards 22,000."

"On the upside, 22,630 is a crucial resistance level, and a breakout above it may lead to an upmove toward 22,800. A bearish outlook remains favorable unless the index decisively closes above its 21-day EMA," added Singhania.

D-Street experts also noted that technically, on the daily chart, Nifty formed a red candle, signalling selling pressure. Over the past week, the NSE 50 index has been consolidating within the 22,300–23,700 range. According to experts, the index is encountering resistance near the bearish gap of 22,668–22,720. 

"As long as the index holds above 22,300, a pullback towards 22,600-22,700 remains possible. However, if Nifty breaches 22,300, the weakness could extend towards the 22,000 level," said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.

Bank Nifty is hovering around a horizontal support zone, which aligns with the 100-week EMA at 47,526. The banking index closed negative and remains below the 21-day and 55-day EMAs, indicating a weak trend. 

According to Singhania, immediate resistance is at 48,600, aligning with the 21-day EMA, and a breakout over this could push the index toward 48,200. The daily RSI stands at 38, reflecting weak momentum. On the downside, support is at 47,500, and a breach below this level may extend selling pressure and trigger further weakness towards 47,000. 

"Technically, the Bank Nifty index formed a red candle on the daily scale while holding the key support level of 47,840.  As long as Bank Nifty remains above 47,840, a relief rally could be possible," said Hrishikesh Yedve.

According to Ajit Mishra, the banking sector has shown resilience, but the Bank Nifty needs a strong close above its 20-day exponential moving average at 48,600 to regain strength and test the 50,000 mark. On the downside, a breach of 47,500 could trigger a sharp correction.

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D-Street trading strategy for next week

Given the ongoing market consolidation, Ajit Mishra of Religare Broking advises traders to focus on option strategies in index until a clear breakout emerges. 

“At the same time, stock-specific approach remains prudent, with a preference for financials, energy, and metals on the long side, while IT and auto sectors may continue to underperform,” said Mishra. Caution is warranted in broader markets, as heightened volatility could lead to further underperformance. 

Mishra advises investors to avoid aggressive positioning in mid and small-cap stocks. According to Puneet Singhania of Master Trust Group, a "sell on rise" strategy for Bank Nifty remains favorable near resistance levels, given the current technical setup.

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.