Indian equity markets are poised for a cautious and potentially turbulent trading week as investors brace for the upcoming Union Budget for the fiscal year 2026-27. This key economic event, historically known for triggering sharp market movements and significant sectoral rotations, has already begun to influence investor behavior in a holiday-shortened week.
Market Sentiment and External Factors
With the Union Budget just days away, market participants have adopted a guarded stance, moderating their risk appetite amid several challenging factors. Persistent foreign institutional investor outflows continue to pressure the markets, while ongoing geopolitical uncertainties add to the cautious environment. The December-quarter corporate earnings season has delivered mixed results, failing to provide a clear directional catalyst.
While some intermittent support may emerge from expectations of relief on US tariff measures and progress in the India-European Union free trade agreement negotiations, these positive developments appear insufficient to counterbalance the prevailing caution. The Indian stock market remained closed on January 26th for Republic Day celebrations, with trading scheduled to resume on Tuesday, potentially keeping volatility elevated in the sessions ahead.
Technical Analysis: Nifty 50 Levels and Market Structure
Choice Broking's Assessment
Hitesh Tailor, Research Analyst at Choice Broking, noted that the Nifty experienced heightened volatility throughout the previous week. The index recorded a high of 25,653 and a low of 24,919.80 before settling at 25,048.65, representing a weekly decline of approximately 645 points. While the index formed a strong bearish candle on the weekly chart, it managed to find support near the 50-week Exponential Moving Average, suggesting some buying interest at lower levels.
"On the daily timeframe, the Nifty has closed decisively below the crucial 25,100 level and is trading below all major EMAs, including the 200-day EMA, reflecting a weakening market structure," Tailor emphasized.
According to his analysis, immediate resistance for the Nifty is positioned at 25,300, followed by 25,400 and 25,600. Key support levels lie at 24,880 and 24,587. A breakdown below 24,350 could potentially intensify downside pressure, maintaining an overall bias that ranges from sideways to bearish.
Additional Technical Perspectives
Amol Athawale, Vice President of Technical Research, echoed the cautious outlook, stating that the market's structure remains weak as long as the Nifty trades below its 100-day simple moving average near 25,500. He identified 24,900 as an immediate support level, warning that a breach below this point could accelerate selling pressure significantly.
"As long as the index remains below 25,500, the weak formation is likely to continue, while a move above 25,200 could trigger a quick pullback towards 25,350–25,500," Athawale explained.
Ajit Mishra, Senior Vice President of Research at Religare Broking, added that the Nifty slipping below its long-term 200-day Exponential Moving Average signals the possibility of further downside in the near term. He identified the 24,750–24,900 zone as the next crucial support area, while 25,300–25,400 is expected to act as a strong resistance level on any recovery attempt.
Analyst Recommendations and Market Outlook
"The break below long-term averages warrants caution, and participants should maintain a selective and balanced approach with strict control on position sizing," Mishra advised.
With multiple factors converging this week—including Budget-related expectations, global trade developments, and currency movements—analysts believe volatility is likely to remain elevated. Key support and resistance levels will prove critical for traders navigating the sessions ahead as they position themselves around one of the most significant economic events of the year.
Disclaimer: The views and recommendations presented above are those of individual analysts or broking companies, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
