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Stock market recap: Benchmark indices Sensex and Nifty 50 ended higher on Monday, supported by a correction in crude oil prices and buying in heavyweight banking and financial stocks.
The Sensex gained 107.25 points, or 0.13%, to close at 81,106.65, having hit an intraday high of 81,339.41. Nifty advanced 58.25 points, or 0.23%, to settle at 25,044.65.
Among Sensex constituents, State Bank of India, Trent, Larsen & Toubro, NTPC, HDFC Bank and ICICI Bank were among the biggest gainers. HCL Technologies, Tata Steel, UltraTech Cement and Bajaj Finance were among the major laggards.
Last week, the Sensex had surged 6,568.49 points, or 8.82%, while the Nifty rallied 1,977.25 points, or 8.57%.
Brent crude, the global oil benchmark, fell 1.04% to $97.46 a barrel.
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The Nifty 50 opened higher on Monday but pared its early gains as profit booking set in after the index tested its opening highs. It subsequently rebounded from its intraday low to close in positive territory. The index opened at 25,076.40, touched a high of 25,084.05 and a low of 24,838.75, before settling at 25,044.65, up 58.25 points, or 0.23%.
The daily candle formed a long lower shadow and a small body, resembling a hanging man pattern. Following the sharp rally, this signals potential exhaustion but needs confirmation. Among heavyweight stocks, State Bank of India (2.56%), Larsen & Toubro (1.82%) and HDFC Bank (1.79%) led the gains. ITC (1.64%), Bajaj Finance (1.56%) and Infosys (1.49%) were among the major laggards. Tata Steel (2.81%) and HCL Technologies (2.43%) were the weakest performers. Market breadth remained negative, with 28 stocks declining, 21 advancing and one unchanged.
Momentum indicators remain strong but point to an overstretched market. The 14-period relative strength index (RSI) stands at 77.88, well above its average of 59.46 and firmly in overbought territory. The moving average convergence divergence (MACD) line, at 474.81, remains comfortably above the signal line at 203.22, while the histogram is positive at 271.59, indicating strong bullish momentum. However, the latest histogram bar has begun to contract, suggesting that momentum may be losing steam. The index is now about 7.4% above its 21-day simple moving average (SMA) and 4.4% above its 200-day SMA. The 21-day SMA has also crossed above the 50-day SMA, signalling a positive medium-term trend.
Immediate support is placed at 24,840, the day's low, followed by 24,500 and the 200-day SMA near 24,000. On the upside, 25,100 is the immediate hurdle, followed by 25,400 and 25,600.
The broader macroeconomic backdrop remains supportive, with renewed foreign investor buying, crude oil prices below $100 a barrel and steady September-quarter earnings. Citi expects the Nifty to reach 28,000 by the end of 2027, while developments in US-Iran talks remain a key watchpoint.
However, after a 10% rally in seven sessions, the overbought RSI and weak market breadth suggest the possibility of a near-term pause. We expect the index to consolidate in the 24,840-25,400 range over the coming sessions, with buying interest likely to emerge on dips as long as it holds above 24,500.
The Nifty Bank opened with a gap-up, recovered from its early intraday low and closed at the day's high. The index opened at 59,219.95, touched a high of 59,741.25 and a low of 58,877.85, before settling at 59,741.25, up 890.60 points, or 1.51%. The intraday low remained above the previous close of 58,850.65, leaving an unfilled rising window. The index formed a bullish marubozu-type candle, closing at the day's peak.
Public sector banks led the rally, with Union Bank of India (5.60%), Punjab National Bank (5.27%) and Bank of Baroda (4.46%) posting the biggest gains. Among heavyweight lenders, State Bank of India (2.56%), HDFC Bank (1.79%) and ICICI Bank (1.53%) also advanced. In contrast, IndusInd Bank (0.89%), Axis Bank (0.30%) and Kotak Mahindra Bank (0.21%) were among the few losers. The banking index outperformed a choppy broader market, as investor interest shifted from IT stocks to banks.
Momentum indicators remain firmly bullish. The 14-period relative strength index (RSI) climbed to 75.41, well above its average of 52.68, signalling strong buying momentum but also overbought conditions. The moving average convergence divergence (MACD) line, at 783.49, is substantially above the signal line at 179.55, while the histogram has widened to 603.94, well above the zero line. This points to accelerating upside momentum following the bullish crossover in late October. The index is now about 7% above its 21-day simple moving average (SMA) and 5.5% above its 200-day SMA, indicating an extended rally that could invite consolidation. There is no visible bearish divergence yet, suggesting that dips could continue to attract buying interest.
Immediate support is placed at 59,000, followed by the unfilled gap zone of 58,850-58,880 and the July swing high near 58,600. A break below 58,600 could open the way to 57,500. On the upside, 60,000 is the immediate psychological hurdle, followed by resistance at 60,500.
Sentiment remains supportive, underpinned by renewed foreign institutional investor buying, crude oil prices falling below $100 a barrel and system-wide credit growth of 18.2%, according to Jefferies. However, with the RSI in overbought territory and the index significantly above its short- and long-term moving averages, some consolidation is likely. We expect the index to trade in the 59,000-60,000 range in the near term. The broader trend remains bullish as long as it holds above 58,600.
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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.
MarketSmith India breaks through the market clutter to bring actionable investment ideas into focus. Our founder and legendary investor, William J. O'Neil, studied these trends and formulated the pathbreaking methodology, the CAN SLIM®. For over five decades now, MarketSmith has been successfully delivering great investment ideas based on its investment philosophy.
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