Stock market today: What should be your trading strategy this week? Experts weigh in

Indian stock market: Markets experienced a strong rebound last week, with benchmark indices Nifty and Sensex rising by over 4%. The surge was driven by improved investor sentiment, increased foreign inflows, and favourable global factors. Experts also attributed this surge to the US Fed hinting at the possibility of two interest rate cuts this year, boosting optimism in the domestic market.

Nifty closed at 23,350.4 for the week, while Sensex ended at 76,905.51, both near their weekly highs. On a weekly basis, the BSE benchmark climbed 3,076.6 points (4.16%), while the Nifty gained 953.2 points (4.25%). As a result, equity investors saw their wealth increase by ₹22.12 lakh crore over the five-day stock rally.

The market capitalization of BSE-listed companies surged to ₹4,13,30,624.05 crore ($4.79 trillion) within these five trading days. Leading financial stocks gained 5.5%, making the most significant contribution to the benchmark indices’ rise.

The Indian rupee also recorded its strongest weekly performance in over two years on Friday.

Key market drivers this week

Multiple factors drove the sharp recovery. Reduced pressure from foreign institutional investors (FIIs), reflected in positive flows across both cash and derivatives segments, brought essential stability. Furthermore, the recent decline in crude oil prices and the dollar index kept them at lower levels, boosting market sentiment.

Dovish signals from the US Federal Reserve regarding future rate cuts, coupled with reports of de-escalation in the Russia-Ukraine conflict, added to the optimism. The rally was broad-based, with all key sectors participating. Realty, energy, and pharma emerged as the top gainers, while midcap and smallcap indices surged between 7.7% and 8.6%, adding to the overall market buoyancy.

“With no major domestic economic events scheduled, the focus will remain on the expiry of March derivatives contracts and FII activity. On the global front, the US markets will be closely watched, with tariff-related updates and GDP growth data expected to influence investor sentiment. Although US markets saw a temporary respite after a sharp decline, mixed signals suggest potential volatility in the coming sessions,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.

Key technical levels to watch out

According to Mishra, Nifty’s recent breakout from the 22,250-22,650 range has propelled it to a crucial resistance level around 23,400, where key moving averages (100-DEMA and 200-DEMA) are positioned. A decisive move beyond this level could set the stage for further gains towards the 23,800-24,100 zone. On the downside, the 22,750-23,000 range is expected to provide strong support in case of a pullback.

The banking and financial sectors have played a pivotal role in the rally, with the banking index reclaiming major moving averages. A breakout above 50,800 in the banking index could drive further gains toward the 51,700-52,800 range, while 49,900 remains a crucial support level.

What should be your market trading strategy this week?

The brokerage firm further recommended investors to adopt a “buy on dips” strategy, focusing on sectors that have demonstrated consistent strength.

“Banking, financials, metals, and energy stocks remain preferred picks, while selective opportunities can also be explored in PSU and auto stocks. Given the sharp rebound in broader markets, midcap and smallcap stocks may offer potential trading opportunities, though aggressive positioning should be avoided,” Mishra said.

Overall, market sentiment remains positive, but investors should remain cautious and closely monitor key technical levels and global cues for further direction, he added.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.