The Indian stock market experienced a sharp and swift correction in the first full week of 2026, dashing the New Year optimism that had propelled indices near record highs. Between January 3 and January 9, 2026, the benchmark Nifty 50 index declined over multiple consecutive sessions, slipping below crucial technical levels. The index concluded the week in the 25,700–25,900 range, marking a significant retreat from its peak and reflecting a clear shift towards risk aversion among investors.
What Drove the Market Sell-Off?
The selling pressure was triggered by a confluence of domestic and global headwinds. Renewed concerns over potential tariff actions from the United States cast a shadow, while persistent outflows by Foreign Institutional Investors (FIIs) drained liquidity from the markets. Rising global uncertainties further weakened sentiment, prompting investors to lock in profits, especially in heavyweight stocks. This profit-booking amplified the downward move, leading to a steep intra-week decline and a cautious market positioning overall.
Expert Technical View: Nifty and Bank Nifty Levels to Watch
Mehul Kothari, Deputy Vice President of Technical Research at Anand Rathi, analyzed the sharp reversal. He noted that the Nifty 50 witnessed a failed breakout, highlighting exhaustion at higher levels. The index has now retreated towards a key support near the weekly low of 25,600.
"A decisive breakdown below this level could extend the decline towards 25,400, which appears to be the maximum near-term downside based on the broader price structure," Kothari stated. While momentum indicators remain weak, the index is nearing oversold territory, which could lead to a technical bounce. However, any recovery is likely to face stiff resistance in the 25,800–26,000 zone.
For the Bank Nifty, Kothari pointed out that the index continues to struggle with strong resistance in the 60,500–61,500 zone, aligned with a long-term rising trendline. The recent rejection near 60,500 has pulled the index towards 59,000, a critical near-term support. "A decisive move below 59,000 would confirm a breakdown and could open the door for a drift towards 58,000 or lower," he added. The broader structure suggests any pullback will likely encounter selling pressure near 61,000–61,500.
Two Stock Picks for the Coming Week
Amid this cautious setup, Mehul Kothari recommends a selective approach and has identified two stocks under ₹200 for investors to consider in the coming week:
1. SJVN: The recommendation is to buy in the range of ₹78 to ₹76. The set target price is ₹85, with a protective stop loss placed at ₹72.
2. NMDC: The advice is to buy in the range of ₹80 to ₹78. The target for this stock is ₹88, and investors should maintain a stop loss at ₹74.
Disclaimer: This information is for educational purposes only. The views and recommendations are those of the individual analyst and not of Mint. Investors are strongly advised to consult certified experts before making any investment decisions.
