Indian Markets See Mild Correction: What to Expect Next

Markets Experience Mild Corrective Movement

The Indian markets saw a week of mild corrective movement, with the Nifty trading in a slightly downward-biased consolidation phase and ending the week on a negative note. The index oscillated in a 485-point range, between 26,178.70 and 25,693.25.

Key Factors Influencing the Market

Despite a supportive backdrop from the Federal Reserve with a 0.25% rate cut, and breadth deterioration pausing, the index faced resistance near recent highs. The India VIX declined by -2.01% to 10.11, reflecting continued complacency and low hedging demand. The Nifty ended the week with a mild loss of 139.50 points or -0.53%.

Broader Market Structure

The broader structure of the Nifty remains bullish, yet the index is navigating a key inflection zone. It continues to hover above the falling trendline, encountering resistance near 26,150–26,200. The ongoing price action reflects hesitation in decisively clearing this resistance.

Technical Analysis

The Relative Strength Index (RSI) is at 61.34, remaining in the bullish zone and showing no divergence against price, indicating a neutral momentum bias. The MACD is above its signal line and continues to maintain a positive crossover.

What to Expect Next

Given the current setup, the coming week may see a cautious-to-flat start. Initial resistance lies at 26,200 and 26,300, followed by a stronger barrier near 26,550, the upper Bollinger band. On the downside, immediate support is at 25,750, followed by the 25,600 zone.

Sector Performance

The Nifty Financial Services and the Midcap 100 Indices have rolled inside the leading quadrant, set to outperform the broader markets relatively. The Nifty Bank, Infrastructure, and PSU Bank Indices are also inside the leading quadrant.

• The Nifty Metal and Auto Indices are inside the weakening quadrant.
• The Nifty PSE, Commodities, and Energy Indices have rolled back inside the lagging quadrant.
• The Realty, IT, and Services Sector Indices are inside the improving quadrant.

Traders should remain moderately cautious and protect profits at higher levels, avoiding aggressive long exposures until a breakout above 26,200–26,300 is confirmed. A stock-specific approach with an emphasis on relative strength and risk management is preferred.