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Stock market recap: Indian equity markets saw a cautious recovery on Monday, after a bruising sell-off last week. Nifty 50 managed to close marginally higher, settling at 23,178.65, up by 27.55 points (0.12%), while Sensex edged 35 points (0.05%) higher to finish at 74,598.92.

The session was marked by high intraday volatility as investors balanced value buying in heavyweights like HDFC Bank and UltraTech Cement against persistent geopolitical tensions, in West Asia, and crude oil prices hovering above $100 per barrel.

Despite the slight gains in frontline indices, the broader market sentiment remained weak. The advance-decline ratio was skewed the bears, with roughly 1,122 stocks advancing and 3,082 declining on the BSE, reflecting localized pain in the mid-cap and small-cap segments. Sectorally, Metals and FMCG showed resilience, while Oil & Gas and IT faced selling pressure.

Two stock recommendations by MarketSmith India:

Buy: Adani Power Ltd (current price: ₹154.5)

Buy: BSE Ltd (current price: ₹2,860)

Nifty 50 performance on Monday

On Monday, Indian equities ended the session on a strong note, with benchmark indices advancing despite broader market weakness. Nifty 50 closed at 23,408.80, up 257.70 points (+1.11%), after trading in a range of 22,955.25–23,502.00, indicating a sharp late-session recovery from intraday lows.

Financial and auto stocks led the gains, with Nifty financial services (+1.36%), private bank (+1.24%), FMCG (+1.14%), and auto (+1.67%) emerging as the top sectoral performers, supporting the index’s upward momentum. However, the broader market breadth remained negative as declines (2,213 stocks) significantly outpaced advances (1,075 stocks), with 84 stocks unchanged, suggesting continued pressure in mid- and small-cap segments. On the sectoral front, Realty (-1.57%), Oil & Gas (-1.58%), Healthcare (-1.37%), and Pharma (-1.25%) saw selling pressure, while IT (-0.10%) remained largely flat.

Nifty 50 staged a sharp rebound in the latest session, closing at 23,408.80 (+1.11%) after witnessing significant volatility in recent days. From a price action perspective, the index formed a strong bullish candle following a sequence of steep declines, indicating short-term buying interest emerging after an extended corrective phase.

However, the broader structure still reflects a lower-high and lower-low price structure, suggesting that the medium-term trend remains under pressure despite the current bounce. The Relative Strength Index (RSI) is hovering near the oversold zone around 30, suggesting that while downside momentum has been stretched, the indicator has yet to signal a sustained bullish reversal. Meanwhile, the MACD remains in negative territory with a widening gap between the MACD and signal line, indicating persistent bearish momentum.

According to O’Neil’s methodology of market direction, the Indian equity market has transitioned to a “Downtrend” from a “Rally Attempt,” indicating an early stage of potential trend stabilization following a period of sustained weakness.

Nifty continues to experience elevated volatility, reflecting fragile market sentiment and persistent near-term uncertainty. During the session, the index briefly slipped below 23,000 before staging a sharp rebound, indicating buying interest at lower levels.

However, a sustained breakdown below 23,000–22,900 would significantly weaken the prevailing technical structure and may trigger an accelerated downside move toward 22,000 in the near term. Such a development would point to continued distribution in the market and reinforce the current negative bias in the broader trend. On the upside, 24,300–24,600 is expected to act as an immediate hurdle for the index.

Nifty Bank's performance

The Nifty Bank index opened on a flat note at 53,721.50 and witnessed steady buying interest during the session. After briefly testing an intraday low of 53,258.15, the index staged a meaningful rebound as buying emerged at lower levels, helping the benchmark recover through the day.

It subsequently moved higher to register an intraday high of 54,664.15 before settling at 54,413.40, gaining 655.55 points (+1.22%) for the session. The recovery indicates that investors selectively accumulated banking stocks after the recent sharp correction. However, despite the rebound, the index continues to trade below key short-term moving averages, reflecting that the broader structure remains fragile. Market participants appear cautious as global uncertainty and intermittent foreign institutional selling continue to influence sentiment across financial stocks.

From a momentum perspective, indicators remain weak despite the intraday recovery. The Relative Strength Index (RSI) is currently placed near 28, indicating deeply oversold conditions, though it still remains below the neutral 50 level, suggesting momentum has yet to meaningfully recover.

The MACD remains in negative territory with the MACD line positioned below the signal line, reflecting persistent bearish momentum in the intermediate trend. This combination suggests that the recent bounce may largely represent a technical pullback following sharp declines. Unless momentum indicators show sustained improvement, rallies could face selling pressure at higher levels. However, oversold conditions may continue to support intermittent short-covering moves in the near term.

Technically, the index is currently approaching a crucial support zone near 53,200–52,800, which coincides with the lower range of the recent correction and proximity to the 200-day moving average around 57,495 earlier breakdown zone, indicating significant structural damage in the trend.

On the upside, immediate resistance is placed around 55,000, followed by stronger resistance near 56,500–57,000, where multiple moving averages are currently positioned. If the index manages to sustain above 55,000, a relief rally toward these resistance levels could emerge. However, failure to hold above 53,200 could trigger another round of selling pressure. In the near term, the index is likely to remain volatile with a range-bound to mildly corrective bias until stronger institutional buying returns.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.

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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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