Market likely to consolidate with a positive bias

Diwali week has brought renewed optimism to the markets. The Indian markets started the new Samvat on a positive note, with benchmarks hitting a fresh 52-week high during the week and extending the weekly gains in the fourth consecutive week for the first time in 2025.

Stronger-than-expected Q2 earnings from major companies, FIIs turning buyers, easing tariff tensions between the US and China and renewed optimism around potential India–US trade deal after President Trump’s call to PM Modi on the occasion of Diwali; buoyed market sentiment.

For the week, the Sensex index jumped 259.69 points or 0.30 per cent to end at 84,211.88, and the Nifty rose 85.3 points or 0.33 per cent to end at 25,795.15.

In the broader market, the BSE Mid-cap Index rose 0.5 per cent and the BSE Small-cap index added nearly 1 per cent. It is pertinent to observe that the Nifty clocked an impressive rally of over 1,500 points from its low of 24,588 — all within just 15 trading sessions in October.

FIIs were modest net buyers for the week with equity purchases worth Rs 342.74 crore, while DIIs continued their buying for the 27th week with purchases worth Rs 5945.31 crore. The Indian rupee ended 12 paise higher at 87.85 per dollar for the week. Announcement of investments exceeding Rs 50,000 crore by large foreign institutional investors in India’s financial and banking sectors has also bolstered sentiment.

Record festive sales underscored India’s surge in consumer demand this season, powered by resilient household spending and GST-driven affordability. However, some caution emerged on the macroeconomic front, as the output of eight core industries decelerated to 3 per cent in September 2025, down from 6.5 per cent in August.

The precious metals market faced extreme volatility, suffering its sharpest single day fall in over a decade, driven by profit booking and a strengthening USD. Crude oil prices surged sharply following fresh sanctions from the US and EU on Russian oil majors, sparking heightened fears of tightening global supply and renewed inflation concerns. This could negatively impact India, as elevated crude prices may widen the fiscal deficit and strain the import bill.

Going forward, Indian stock market is likely to consolidate with a positive bias driven by robust DII inflows, Q2 earnings and global cues including the US Fed’s probable 25 bps rate cut and RBI MPC minutes hinting at a December cut. FII inflows and upbeat management commentaries could help sustain positive market momentum, though intermittent profit booking cannot be ruled out.

It’s very difficult to predict when the next recession or stock market crash will come, so many of the best investors don’t even try. Instead, look for good companies with the strength to make it through the occasional challenging economic environment.

FUTURES & OPTIONS / SECTOR WATCH

After trading positively for better part of the week ended, the Nifty ended with a modest gain, witnessing profit booking in the latter half of the week.

Bank Nifty closed on a flat note. Nifty came within striking distance of its all-time high, sparking hopes of a fresh breakout.

However, the index couldn’t sustain the momentum and faced profit booking, suggesting that investors may be turning cautious after the sharp run-up. In the options segment, the highest Call open interest for Nifty was observed at the 26,000 and 25,900 strike levels, whereas notable Put open interest was concentrated at the 25,500 and 25,700 strikes.

For Bank Nifty, significant Call open interest was seen at the 58,000 strike, with substantial Put open interest at the 57,000 strike. Implied volatility (IV) for Nifty’s Call options settled at 10.82 per cent, while Put options concluded at 11.57 per cent.

The India VIX, a key indicator of market volatility, concluded the week at 11.73 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 0.83 for the week. While the technical structure is improving, the breakout is not fully confirmed until there is a strong follow-up week above 25,900.

Key support for Nifty is placed at 25,500–25,400, while resistance levels are seen near 26,000 and 26,200. In the coming week, market players would do well to remain tactically optimistic but cautious.

Traders should avoid overly aggressive positions. A prudent approach would be to trail existing positions, protect gains, and adopt a selective, stock-specific strategy while closely monitoring broader index behaviour around breakout levels.

Adopt a buy-on-dips strategy while keeping a close watch on open interest positions, which could guide market direction in the coming sessions.

From a technical perspective, several sectoral indices are showing signs of continued strength and are likely to outperform in the short term. Leading the pack are Nifty Metal, IT, CPSE, Realty, and Oil & Gas. These sectors have shown resilience even during broader market pauses.

Stocks looking good are Axis Bank, Bajaj Finance, NALCO, Shriram Finance, PNB Hsg and Naukri. Stocks looking weak are Ambuja Cement, Adani Enterprises, Exide Inds, Marico, Pidilite and Ultratech.

STOCK PICKS

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