Market Wrap

Indian equities began the week on a positive note, with the Nifty 50 rising 0.60% to 22,555.75 and the Sensex gaining 0.66% to 72,382, snapping the market's prolonged losing streak. The indices opened with a gap-up, but early gains were trimmed by profit booking before a mid-session recovery helped benchmarks reclaim lost ground. The rebound was led by FMCG, with ITC surging nearly 5% following a positive brokerage upgrade and lifting the sector index by almost 2%. Financial stocks also gained after encouraging Q2 business updates from banks and NBFCs.

Banking-sector updates remained constructive, with PNB, Bank of Baroda, AU Small Finance Bank, Bajaj Finance and HDFC Bank reporting healthy loan or advance growth. In the consumption space, Trent reported 23% YoY revenue growth in Q2, while Zudio crossed the 1,000-store milestone, reinforcing the strength of the organised consumption theme.

Global conditions also provided some relief. Softer-than-expected U.S. employment data reduced expectations of aggressive Federal Reserve tightening, while easing crude prices improved sentiment toward emerging markets. However, the broader macro setup remains challenging. The rupee weakened toward ₹96/$, FII selling continued, and the U.S. 10-year Treasury yield remained elevated near 5.3%, keeping pressure on valuations. DIIs continued to provide an important counterbalance through strong domestic buying.

Overall, Monday's recovery represents an improvement in sentiment but does not yet confirm a reversal of the broader corrective trend. The market remains highly sensitive to global yields, currency movements, crude prices and institutional flows.

What's Ahead

The key event for the week remains the RBI Monetary Policy Committee meeting, which runs through October 7. Markets are divided between a continuation of the 5.25% repo rate and a potential 25-basis-point hike to 5.50%, with elevated crude prices, inflation risks and rupee weakness central to the debate. Any unexpected tightening could weigh on rate-sensitive sectors, while a hold accompanied by a supportive stance could reinforce the recent recovery.

Technically, 22,500–22,550 is emerging as an important near-term support zone for the Nifty, while 22,600–22,700 represents the first significant resistance area. A sustained move above 22,700 could strengthen the recovery and encourage further short covering, whereas a break below 22,500 could revive selling pressure.

Investors should also monitor crude oil, the rupee, FII/DII flows, U.S. Treasury yields and Q2 business updates. Developments around SEBI's potential reconsideration of proposed derivatives settlement changes could also influence capital-market stocks.

The key question is whether Monday's rebound can attract sustained institutional buying, or whether it remains a relief rally within the broader corrective phase.

Market Snapshots

Institutional Activity

Sectoral Performance

Technical Outlook

Nifty 50

The NIFTY 50 gained 133.80 points, or 0.60%, to 22,555.75, recovering from recent weakness as broad-based buying and easing crude prices improved sentiment. The index traded between 22,397.10 and 22,621.80 before closing near the upper half of the day's range, while market breadth remained positive with 31 stocks advancing against 18 declining. The RSI moved toward the 30 level, suggesting momentum remains weak despite the rebound and that the index is still close to oversold territory. Immediate support is placed at 22,231 and 22,030, while 22,880 and 23,081 are the key resistance levels. A sustained move above 22,880 would strengthen the recovery, whereas a break below 22,231 could revive selling pressure.

BankNifty

The NIFTY BANK advanced 263.35 points, or 0.48%, to 54,714.10, supported by broad-based buying across banking constituents. The index recovered from its intraday low of 54,370.60 and closed higher after regaining momentum in the second half, with 11 stocks advancing against only 3 declining. The RSI moved toward 40, indicating a gradual improvement in momentum compared with the broader market. Immediate support stands at 53,956 and 53,488, while resistance is placed at 55,472 and 55,941. Holding above 53,956 would keep the recovery attempt intact, while a sustained move above 55,472 could provide stronger confirmation of improving momentum.

NIFTY FINANCIAL SERVICES

The NIFTY Financial Services index rose 100.30 points, or 0.41%, to 24,656.40, supported by gains across several financial stocks and positive market breadth, with 13 constituents advancing against 7 declining. BSE, Shriram Finance, REC and ICICI Lombard were among the stronger performers, although weakness in MFSL and HDFC Bank limited the overall advance. The index remains in a recovery attempt following recent selling pressure, with 24,333 and 24,133 acting as immediate support levels and 24,980 and 25,180 as key resistance zones. A move above 24,980 could improve the short-term technical structure, while a break below 24,333 would weaken the recovery setup.

Sensex

The BSE Sensex gained 472.77 points, or 0.66%, to 72,382.47, extending the broader market rebound as gains in ITC, Eternal, Bharti Airtel, Bajaj Finance and Adani Ports lifted the benchmark. The index maintained positive breadth, with 20 stocks advancing against 10 declining, although technology and HDFC Bank remained sources of pressure. The recovery indicates improving short-term sentiment, but the index remains below important resistance levels following its recent correction. Immediate support is positioned at 71,405 and 70,800, while 73,360 and 73,965 are the key resistance levels. Sustaining above 71,405 could support further recovery, while a decisive move above 73,360 would strengthen the bullish reversal case.