The Indian equity market is poised to begin the trading week on a positive note, with key benchmark indices expected to open higher on Monday, January 5. This optimistic sentiment follows gains in Asian markets and is supported by strong domestic closing levels recorded in the previous session.
Market Outlook and Global Triggers
The positive bias is reflected in the trends on Gift Nifty, which was trading at 26,542, marking an increase of 76 points or 0.29% from the previous close of Nifty futures. This sets the stage for a firm opening for the domestic indices, tracking broader global cues.
On Friday, January 2, the market had ended with robust gains. The Sensex advanced 573 points, or 0.67%, to close at 85,762.01. The Nifty 50 index touched a historic intraday high of 26,340 before settling at a record closing level of 26,328.55, gaining 182 points or 0.70%. This performance was fueled by widespread buying across sectors and growing optimism as the December quarter (Q3) earnings season approaches.
Technical Analysis and Predictions
Sensex Forecast
Sharing his technical perspective, Ponmudi R, CEO of Enrich Money, noted that while the Sensex consolidated below its all-time highs at 85,762.01, it has been relatively slower to break out compared to the Nifty and Bank Nifty. However, he emphasized strong underlying support from heavyweight banking and metal stocks.
The index continues to attract buying interest in the 85,200–85,500 support band. According to his analysis, a convincing breakout above the 86,000 level could accelerate upward momentum, potentially opening the path towards the 86,500–87,500 range in the coming weeks.
Nifty 50 and Derivatives Data
The Nifty 50's record close above 26,328.55 confirms its position within a long-term rising channel. Ponmudi stated that the index remains comfortably above its 20-day and 50-day Exponential Moving Averages (EMAs), reinforcing the medium-term uptrend's strength.
He provided a detailed view on derivative positioning, noting a mildly bullish yet cautious sentiment ahead of the weekly expiry. Cumulative Put Open Interest is significantly higher at 22.31 crore, compared to Call Open Interest of 13.61 crore, indicating strong support building below current levels.
Aggressive put writing was observed in the 26,200–26,300 zone, suggesting strong defense by market participants. Positive Open Interest additions in select out-of-the-money call strikes point to expectations of sustained upside momentum. This structure reinforces a 'buy-on-dips' market, where declines toward 26,200–26,300 are likely to attract fresh buying.
As long as Nifty holds above the 26,100–26,200 support zone, the bullish bias remains intact. A sustained move above 26,400 could pave the way for targets near 26,600–27,000 in the near term, driven by earnings optimism and liquidity.
Bank Nifty Projection
Bank Nifty also made history by closing above its lifetime high at 60,150.95. It remains firmly within its rising channel and above key moving averages. Ponmudi offered a constructive outlook, stating that holding above the 59,800–60,000 zone keeps the near-term outlook positive.
Upside potential is seen toward 60,500–61,000, with an extension toward 62,000 possible, supported by expectations of improving credit growth and favorable liquidity conditions. A dip below 59,500 could trigger short-term consolidation, but the primary trend is decisively upward.
Key Takeaways for Investors
The overall market setup suggests a continuation of the bullish trend, supported by technical indicators and derivative data. The immediate focus will be on the Nifty's ability to sustain above key support levels and capitalize on the breakout. Investors are advised to monitor global developments alongside the commencement of the Q3 corporate results season for further directional cues.
Disclaimer: The views and recommendations presented are those of individual analysts or broking companies. Investors are advised to consult certified experts before making any investment decisions.
