Market Wrap

Indian equities ended the week on a relatively firm note, recovering from a sharp mid-week sell-off that had pushed the Nifty to a 25-week low. The Nifty 50 closed Friday at 23,140.50, but despite the late-week recovery, the index ended the week approximately 0.9% lower, extending the recent phase of market weakness.

The broader market remained under pressure as investors continued to navigate elevated crude prices, persistent foreign outflows and a cautious global risk environment. Realty stocks showed relative strength, emerging among the better-performing segments, although the broader market remained vulnerable to changes in global risk sentiment.

The biggest source of near-term uncertainty remained the US-Iran conflict and developments around the Strait of Hormuz. Fresh indications of a possible diplomatic route and discussions around reopening the crucial shipping corridor helped Brent crude decline around 2% on Friday to approximately $104.32 a barrel. A sustained moderation in oil prices could provide some relief to India, given its sensitivity to imported energy costs and the rupee's external balance.

However, the improvement in crude prices has yet to translate into a broader improvement in investor sentiment. US Treasury yields remain elevated, while foreign investors continue to maintain a cautious stance toward Indian equities. Domestic liquidity conditions are also being closely watched, with the RBI managing surplus banking liquidity through bond sales and foreign-exchange interventions.

At the same time, the latest RBI commentary continues to point toward resilience in India's financial and external sectors despite the challenging global backdrop. This provides an important domestic cushion, although global factors remain the dominant near-term driver of market direction.

What's Ahead

The September 28 session is likely to remain highly sensitive to developments in the Middle East. Markets will closely monitor US-Iran negotiations, crude oil prices and the Strait of Hormuz, with any meaningful progress on the diplomatic front potentially reducing pressure on global risk assets. Conversely, renewed escalation could quickly push oil higher and revive selling pressure.

Beyond geopolitics, investors will track FII activity, the rupee, US Treasury yields and domestic market breadth for confirmation of whether risk appetite is improving.

The key technical and sentiment question is whether the Nifty's recovery from its 25-week low can attract follow-through buying. After several weeks of weakness, sustained participation from domestic and foreign investors will be important to determine whether Friday's move represents the beginning of a broader stabilization or remains a short-term rebound within the ongoing corrective phase.

Market Snapshots

Institutional Activity

Sectoral Performance

Technical Outlook

Nifty 50

The NIFTY 50 gained 77.40 points, or 0.34%, to close at 23,140.50, recovering after the previous session's sharp decline and finding support from broad-based buying. The index traded in a relatively narrow range between 23,020.95 and 23,162.70, while favourable market breadth, with 34 stocks advancing against 15 declining, indicated improving participation. However, the RSI remains near 40, signalling that momentum is still subdued and the broader technical setup remains cautious. The index has immediate support at 22,935 and 22,809, while a sustained move above 23,346 and 23,472 would be required to strengthen the recovery and signal improving near-term momentum.

BankNifty

The NIFTY BANK advanced 141.90 points, or 0.26%, to close at 55,580.40, recovering from its opening level and moving higher through the session as buying emerged in key banking stocks, particularly Axis Bank and AU Small Finance Bank. The index touched an intraday high of 55,762.60 and ended with 8 constituents higher against 6 declines, reflecting moderately positive breadth. However, the RSI near 40 continues to indicate subdued momentum, keeping the near-term technical structure cautious. Support is placed at 55,088 and 54,784, while resistance remains at 56,073 and 56,377; a decisive move above the resistance zone could provide greater confirmation of a sustained recovery.

NIFTY FINANCIAL SERVICES

The NIFTY Financial Services index rose 140.70 points, or 0.56%, to close at 25,094.85, outperforming both the NIFTY 50 and NIFTY Bank as buying interest emerged across several financial stocks. Gains in MFSL, Axis Bank, REC, Bajaj Finance and HDFC Bank supported the advance, while 12 constituents closed higher against 8 declines, keeping breadth favourable. The index continues to hold above its immediate support zone, although the broader market remains sensitive to momentum and global risk factors. Near-term support is placed at 24,816 and 24,644, while resistance is seen at 25,373 and 25,545; sustained trading above the resistance band would improve the short-term technical setup.

Sensex

The BSE Sensex gained 315.20 points, or 0.43%, to close at 73,895.74, supported by broad-based buying in Axis Bank, M&M, Asian Paints, Bajaj Finance and HCLTech. The index maintained a positive bias through the session and market breadth remained constructive, with 19 stocks advancing, 10 declining and 1 unchanged. The recovery provides some near-term stability after recent weakness, although the broader trend remains dependent on follow-through buying. Immediate support is positioned at 73,188 and 72,750, while resistance is placed at 74,604 and 75,042. A sustained move above the resistance zone would strengthen the recovery setup, whereas a break below support could signal renewed selling pressure.