Indian equity markets may find support this week from the Reserve Bank of India's latest measures to attract foreign capital, continued buying by domestic institutional investors (DIIs) and softer crude oil prices. However, persistent foreign institutional investor (FII) selling, geopolitical tensions in the Middle East and volatility in global markets are likely to keep investors cautious.
The Nifty is expected to remain range-bound in the near term, with the next directional move likely to emerge only if the index breaks above 23,500 or slips below 23,150.
Indian equities ended the last week on a mixed note amid cautious sentiment. The BSE Sensex declined 0.71 percent to close at 74,243.34, while the Nifty 50 fell 0.80 percent to 23,366.70.
The Bank Nifty, however, outperformed, gaining 0.50 percent to finish at 54,496.20, supported by selective buying in banking stocks.
Among sectoral indices, media and banking stocks emerged as the key gainers, while FMCG, realty, metal and financial services stocks witnessed notable selling pressure.
The Nifty opened the week at 23,654.50 and fell to a low of 23,150.50 before recovering part of the losses and ending at 23,366.70, indicating buying interest near key support levels.
Market volatility remained elevated through the week due to the RBI's monetary policy announcement, Middle East tensions, fluctuations in crude oil prices, continued FII outflows and movements in the rupee. While RBI measures aimed at attracting foreign capital and supporting the currency offered some stability, concerns over inflation, growth and global uncertainties continued to weigh on sentiment.
Technically, the Nifty continues to trade below its short-term moving averages, while momentum indicators suggest a neutral trend.
The formation of a bearish weekly candle and a close below the previous week's level indicate a mildly negative undertone.
Immediate support is placed at 23,150. A decisive breach of this level could trigger a decline towards 22,500. On the upside, resistance is seen near 23,500. A sustained move above this level could improve sentiment and open the door for a rally towards 24,100 in the coming weeks.
The Bank Nifty ended the week at 54,496.20, reflecting continued buying interest in banking stocks.
Although the index remains below its short-term moving averages on both daily and weekly charts, the formation of a small bullish weekly candle and a close above the previous week's level suggest a positive bias.
A long lower shadow on the weekly candle points to strong buying support at lower levels.
The index has been consolidating within a broad range of 53,000-55,500 over the past several weeks. A breakout above 55,500 or a breakdown below 53,000 will be needed to determine the next major trend.
The Sensex closed the week at 74,243.34, down 0.71 percent, indicating a mildly negative bias.
The index remains below the key resistance level of 76,750, suggesting that the broader corrective trend remains intact.
Immediate support is seen around 74,000. A sustained move below this level could lead to further weakness. However, as long as the index holds above 74,000, the ongoing consolidation phase is likely to continue.
A decisive breakout above 76,750 will be required to restore positive momentum.
The RBI and the Centre announced a series of measures aimed at attracting foreign investment, improving liquidity and supporting the rupee.
The RBI expanded the Fully Accessible Route (FAR) by including newly issued 15-year, 30-year and 40-year government securities, allowing foreign investors to invest in these bonds without restrictions.
In a major boost to foreign participation, the government exempted foreign portfolio investors (FPIs) from capital gains tax and interest income tax on eligible government securities, improving post-tax returns for overseas investors.
The RBI also removed the 30 percent cap on short-term investments and abolished concentration and security-specific limits applicable to FPIs investing through the General Route.
In addition, investment limits for NRIs and Overseas Citizens of India (OCIs) in listed equity instruments were enhanced without requiring SEBI registration. The facility has also been extended to all Persons Resident Outside India (PROIs).
These measures are expected to improve liquidity, strengthen the rupee and support medium-term sentiment in both debt and equity markets.
Note: Research for this article was provided by the Research Desk of MyEquityLab.com, a SEBI-registered Research Analyst (Registration No. INH000023843).
Disclaimer: This article is intended solely for informational and educational purposes and should not be construed as investment advice or a recommendation to buy, sell or hold any security.
