Indian stock markets kicked off the week on a downbeat note this Monday. Major companies including Reliance and ICICI Bank reported quarterly profits that missed expectations, dragging the markets lower. Wipro also saw a decline after issuing a disappointing revenue projection for the upcoming March quarter.
Market Indices Show Decline
The Nifty 50 index fell by 0.45% to settle at 25,582. The Sensex decreased by 0.4%, closing at 83,224.86. These figures were reported at 9:17 IST, setting a cautious tone for the trading day.
Weekly Market Recap and Outlook
Dharmesh Shah, Vice President at ICICI Securities, provided insights into the market's recent performance. Indian equities ended the volatile week on a flat note, settling at 25,694 amid ongoing geopolitical uncertainties. Sectoral performances were mixed, with Metal, PSU Banks, and IT sectors in the limelight, while Pharma, Realty, and Auto sectors lagged behind.
The weekly price action formed a Doji candle, indicating indecisiveness among traders. A close above the doji high of 25,900 would signal the end of the current corrective phase. The index is now forming a higher base around its 100-day EMA at 25,626, coinciding with a long-term trend line held since the COVID low. This support zone has helped arrest the decline and allowed the index to reclaim the 25,700 mark on a weekly basis.
Upcoming Week Crucial for Earnings
The upcoming week will be critical as several index heavyweight stocks are scheduled to report their Q3 earnings. Positive earnings outlooks from these leaders could significantly improve market sentiment. Over the past two months, the Nifty 50 has remained confined to a narrow range of 25,300-26,300, driven by uncertainty surrounding US-India bilateral negotiations and heightened global volatility.
We expect this consolidation to continue, with stock-specific movements gaining prominence as the Q3 earnings season unfolds. Since October 2025, intermittent corrections of 3–4% have presented selective buying opportunities, followed by gradual recoveries in subsequent weeks. With the current ~3.4% correction already in place and oversold technical conditions, aggressive selling is not recommended.
Focus on Quality Stocks
Investors should focus on accumulating quality stocks with strong fundamentals. Key support is placed at 25,300, based on several observations:
- A 4% correction from the all-time high, around 25,320.
- The 61.8% retracement of the previous up-move from 24,580 to 26,325 at 25,270.
- The 200-day EMA, which has been held since April 2025, at 25,150.
Positive Bias Supported by Market Breadth
Our positive bias is further validated by market breadth analysis. The Nifty 500 has surged nearly 24% from its April 2025 lows and currently trades just 4% below its all-time high set in September 2024. While this may raise concerns about momentum loss, a deeper look tells a more encouraging story.
Historically, market breadth bottoms when the percentage of stocks trading above their 200-day SMA falls below 15%. Rallies typically peak only when this figure approaches 90%. Currently, this metric stands near 39%, well below exhaustion levels and still beneath equilibrium. This suggests a large universe of stocks remains under-participated, leaving ample room for further upside.
Key Factors to Monitor
Several factors will influence market movements in the coming days:
- Q3-FY26 earnings reports from major companies.
- Progress on the US-India Trade Deal.
- Upcoming US GDP data releases.
- BOJ policy rate decisions.
- Brent Crude Oil prices, which have faced resistance near $67. Further decline in Brent crude oil bodes well for the domestic market.
Stock Recommendation from Dharmesh Shah
Dharmesh Shah of ICICI Securities recommends buying NMDC shares. He suggests purchasing in the range of ₹80-83, with a price target of ₹94 and a stop loss of ₹76.
Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 16/01/2026 or have no other financial interest and do not have any material conflict of interest. The views and recommendations provided in this analysis are those of individual analysts or broking companies. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
