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Indian stock markets ended the week on a strong note buoyed by the India-US trade deal and with an interim trade agreement between the two countries made on Saturday, the domestic markets are set to enter next week trade on strong footing. President Donald Trump issued an executive order scrapping an additional 25% levy imposed over New Delhi’s purchases of Russian oil while also slashing “reciprocal” tariffs from an earlier 25% to 18%.

Nifty ended its two-week losing streak ending above the crucial 100-day moving average. Meanwhile, fear index India VIX has cooled-off sharply by 20% during the week to close near 12 and any further decline in volatility is expected to offer additional comfort to the bulls.

With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Q: Nifty ended with weekly gains of 1.4% led by the India-US trade deal managing to close just shy of 25,700. What do Nifty charts suggest for next week of action?

The past week proved to be a high-voltage one for the benchmark index, with Nifty navigating an environment of elevated volatility. The index swung within a massive 1,662-point range, marking its widest weekly movement since June 2024.

On Union Budget day, Nifty slipped sharply to an intraday low of 24,571, weighed down by concerns over the increase in STT on F&O transactions. However, the weakness was short-lived. A sharp 1,770-point rebound followed as global risk sentiment improved after U.S. President Donald Trump announced an immediate reduction in reciprocal tariffs on Indian goods from 25% to 18%. This positive trigger propelled the index to an intraday high of 26,341, reviving hopes of a fresh all-time high.
That optimism, however, faded quickly. Within the very first minute of trade, Nifty witnessed a sharp 600-point intraday cut, reflecting aggressive profit booking amid heightened volatility. Despite supportive global cues, the index failed to decisively scale new highs, underscoring the fragile sentiment prevailing in the market.
In the latter half of the week, Nifty moved into a phase of sideways consolidation. Intense selling pressure in IT stocks capped broader market gains, as rising concerns around recent developments in artificial intelligence triggered apprehensions over the sector’s long-term growth outlook. Consequently, the Nifty IT index emerged as the worst-performing sector, ending the week with a sharp decline of 6.91%.
From a technical perspective, momentum indicators point towards consolidation, suggesting that the index may continue to oscillate within a defined range before a decisive directional move emerges.

Looking ahead, the 100-day EMA zone of 25,500–25,550 is expected to act as immediate support, followed by 25,200. On the upside, the 25,850–25,880 region will remain a critical resistance band. A sustained move above 25,880 could open the door for further upside toward 26,000, followed by 26,200 in the near term, setting the stage for another attempt at higher levels.

Q: February has traditionally been a week month but the start has so far been quite encouraging. What will be your advice to investors who have a positional view on the markets and would like to make trades based on this. Based on the seasonality data and post-budget trends, are there specific sectors which stand a higher chance to deliver gains for the investors?

Despite February being seasonally weak, post-Budget trends support a cautiously positive positional approach. In the week following the Budget, Sensex has closed positive 11 out of 15 times with an average gain of 2.10%, while Nifty has ended positive 12 times with an average gain of 2.04%.

From a 3-month perspective, both Sensex and Nifty have delivered positive returns 9 out of 15 times, with average gains of 6.77% and 7.40% respectively.

Sectorally, Pharma has been the strongest performer. In the week post Budget, Pharma has closed positive 14 out of 15 times with an average gain of 3.20% and a negligible average loss of just 0.24% in the lone negative instance. Over three months, Pharma has delivered positive returns 10 times with an average gain of 7.45%, while losses averaged only 1.90%.

Financial Services has also shown consistency, closing positive 11 times in the week post Budget with an average gain of 2.93%, while the 4 negative instances saw an average loss of 3.21%. From a 3-month view, Financial Services ended positive 9 times with an average gain of 10.85%, while losses averaged 8.81%.

Q. What is your view on Bank Nifty?

The banking benchmark index Bank Nifty registered a fresh all time high of 61764 on Tuesday, reflecting continued strength in the financial space. However, the index failed to hold on to higher levels, as profit booking emerged sharply in the latter half of the week. Despite this pullback, Bank Nifty ended the week on a strong note at 60120, delivering nearly 3% weekly gains and forming a bullish candle accompanied by a long upper shadow on the weekly chart — a sign of intraday volatility and selling pressure at elevated zones.

From a trend perspective, the index remains comfortably positioned above all its crucial moving averages, reaffirming the resilience of the medium term uptrend. That said, momentum indicators and oscillators have started to flatten out, signalling a likely consolidation phase or sideways movement as the market digests recent gains and awaits fresh triggers.

Looking ahead, the 20 day EMA placed between 59600-59500 is expected to act as the immediate and most important support zone for the index. Holding above this region will be critical for maintaining the current bullish structure. On the upside, the band of 60400–60500 continues to act as a strong supply zone. A decisive and sustained breakout above 60500 could reignite bullish momentum, paving the way for a swift rally towards 61200, and potentially extending further to 62000 in the short term.

Q: FIIs have remained net buyers this week while INR has also managed to deliver its best weekly closing in nearly three years. Do you expect these reversals to sustain for markets to benefit?

While FIIs have turned net buyers this week and the INR has posted its best weekly close in nearly three years, it is still premature to assume that the reversal will sustain. A major portion of the FII inflow came from a single large buying session after the India–US trade deal announcement, rather than a steady flow trend. On the currency front, the dollar index has eased marginally from its recent high of 92.19 recorded on 28th January, but it has largely moved in a narrow range over the last few sessions, indicating that the weakness is not yet decisive. A sustained dollar decline is typically needed to drive durable EM inflows.

Importantly, most key domestic triggers namely the India–US trade deal, Union Budget, RBI policy decision, and Q3 earnings season are already behind us, yet broad-based FII participation has not meaningfully returned. In addition, elevated FII index futures shorts have not seen expected unwinding.

For markets to build a stronger uptrend, consistent FII cash buying and visible short covering will be two crucial triggers, going forward.

Q: Tech stocks were worst hit this week with Nifty IT index falling more than 6%. How should one trade in this pack?

The Nifty IT index was among the worst performers this week, falling over 6%, largely triggered by renewed global concerns around AI-led disruption after Anthropic launched an advanced legal-focused AI tool. This development intensified fears that AI could increasingly replace or compress high-value software and consulting work, a risk not limited to Indian IT firms but also impacting US technology and software companies. The selloff reflects worries about future billing models, pricing power, and demand visibility across the global IT services space.

Technically, the setup has weakened further. The IT index is trading below its key short- and long-term moving averages and has confirmed a double-top neckline breakdown, with the measured downside target placed near the 35,050–35,000 zone. RSI has slipped below 40, indicating bearish momentum, and the MACD line has moved below the zero line. Unless the index reclaims and sustains above 36,000, weakness is likely to persist. Traders should avoid aggressive bottom fishing and look at rallies toward resistance as potential sell-on-rise opportunities until momentum stabilizes.

Q: Defence stocks struggled this week despite a largely positive budget for this sector. Where do you see opportunities?

Defence stocks underperformed this week despite a budget that was broadly supportive for the sector, mainly because price action continues to lack momentum. The Defence index has been moving in a wide 8,359–7,459 range since Budget day and, in fact, has remained largely range-bound since September last year with no sustained directional trend. The only phase of notable outperformance was during the post–Operation Sindoor rally from early April to late June 2025, after which most gains were retraced and momentum faded.

Technically, the 8,300–8,400 zone remains a strong resistance band. Only a decisive breakout above this area with volumes can revive buying interest at the index level. Until then, opportunities appear selective rather than broad-based. Among the pack, Data Patterns and MTAR Tech currently display relatively stronger price structures, while most other defence names continue to show weak or sideways setups. Traders may focus on stock-specific strength instead of the entire theme.

Q: Apar Industries, Aarti and Nykaa have been star performers this week while BDL, Hindustan Copper and GRSE have been big losers. What should investors do with them?

Apar Industries, Aarti Industries and Nykaa have shown relative strength this week, but the approach should remain level-based rather than chasing momentum. After the post-Budget gap-up, APARINDS has moved in a tight range, with 9,750–9,800 acting as a strong resistance; only a sustained breakout above this zone can trigger fresh move higher. AARTIIND has given a downward-sloping trendline breakout with a rising RSI, and the bullish bias holds as long as it sustains above 420–415 zone. Nykaa has given a volume-backed horizontal trendline breakout, with RSI rising and DI+ crossing DI-, indicating continued upside potential on follow-through.

On the laggard side, BDL and GRSE remain weak as the defence pack underperforms. Both trade below key short- and long-term moving averages. BDL has broken below the 1,305–1,300 swing low, while GRSE failed near 2,800 and slipped. Trend reversal is unlikely unless these resistance levels are reclaimed. Hindustan Copper has corrected about 24% after a parabolic rally and is now consolidating in a 658–555 band since last 7 sessions. Traders should wait for a decisive range breakout for fresh directional signals.

Q. Which Sectors you feel can outperform from here on & stocks within them?

From a technical perspective, several sectoral indices are showing signs of relative strength and are poised to outperform in the near term. Notably, the Nifty CPSE, Nifty PSE, Nifty Metal, and Nifty Oil & Gas indices are displaying sustained momentum, favourable price structures, and strong sector specific tailwinds. These indices continue to trade above key moving averages, and their short term indicators point toward continued outperformance as long as current trend supports hold.

On the contrary, pockets such as Nifty IT, Nifty Pharma, and Nifty Healthcare appear comparatively weaker on the charts.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

India’s National Stock ‍Exchange (NSE) on Friday approved the creation of a unit ⁠to run a proposed national coal trading exchange.

Last year, India announced plans to establish a ‌coal trading ‌platform to buy and sell domestically produced coal amid ‌surging output.

NSE will hold at least a 60% stake in the coal exchange, with the remaining 40% to be potentially allocated to other shareholders, the exchange operator said in a filing.

“The platform ‌will enable ‍electronic trading of physical coal ‍through standardised contracts and facilitate physical ‌delivery and, in future, derivative products, subject to regulatory approval,” NSE said.

The exchange operator said the lack of a unified trading platform has resulted in price inefficiencies, limited access for smaller ‍participants and the absence of a reliable spot benchmark.

State-owned Coal India ‍currently accounts ⁠for about ⁠three-quarters of the more than 1 billion tonnes of coal mined in India, the world’s second-largest coal market after China.
NSE said it will submit a licence application to the Coal Controller Organisation of India for the proposed exchange.

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Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

More than 120 smallcap stocks delivered double-digit gains in the week gone by, marking one of the sharpest short-term rallies in the segment in recent months. The rally was broad-based, cutting across textiles, auto ancillaries, infrastructure, chemicals, consumer and capital goods.

Stocks such as VTM, Gokaldas Exports, Garware Hi-Tech Films, Faze Three and United Foodbrands surged between 35% and 45% in just five trading sessions, while several others posted weekly gains in the 20% to 30% range. Even traditionally steady names in pipes, engineering, auto components and consumer discretionary joined the rally, signalling a sharp improvement in risk appetite.

The move comes after months of relentless selling in small and midcaps, during which valuations corrected sharply despite earnings holding up in several pockets. Analysts estimate that over a third of the smallcap universe, representing nearly Rs 16 lakh crore in market capitalisation, is now trading at fair or even undervalued levels compared with historical averages.

According to Ponmudi R, CEO of Enrich Money, the overall market has entered a consolidation phase after digesting major policy triggers. “With the Union Budget 2026 and the RBI’s monetary policy decisions now largely priced in, investor focus has shifted to implementation, capex execution and the pace of actual spending,” he said, adding that sentiment remains cautiously optimistic and event-driven in the near term.

Currency movements and foreign portfolio investor flows are also playing a role. The recent recovery in the rupee from record lows, aided by the India-US trade agreement announcement, has improved near-term confidence. At the same time, easing foreign selling pressure has reduced the supply overhang that weighed heavily on smallcaps through the previous quarter.

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Arjun Guha Thakurta of Anand Rathi Wealth believes the recent correction created a disconnect between stock prices and business fundamentals. He points out that while many smallcap stocks fell sharply, earnings growth across the segment remained reasonably healthy. Much of the selling, he said, was driven by risk aversion, global uncertainty and foreign outflows rather than a collapse in underlying business performance.
“When weak hands have already sold, even modest improvements in confidence can lead to sharp recoveries, especially in segments that have underperformed for extended periods,” Thakurta said, cautioning, however, that selectivity remains crucial.
Not all experts are convinced that the rally marks the start of a sustained uptrend. Ravi Singh, Chief Research Officer at Master Capital Services, said investors should differentiate between structural stories and tactical trades.

“Smallcap companies typically operate with narrow product lines or concentrated business models. Benefits from policy changes such as lower tariffs will be meaningful only for companies with direct exposure to export-linked sectors,” he said.

Macro risks also remain on the radar. Investors are closely tracking January consumer price inflation data, which will be released using a revised base year of 2024 and is expected to offer a more accurate picture of consumption trends. Global developments, particularly geopolitical negotiations involving the US and Iran, could also inject volatility into commodity prices and risk assets if tensions escalate.

Data: Ritesh Presswala

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)