Indian Equity Markets Retreat as Profit-Booking Intensifies
The Indian stock market witnessed a significant reversal on Friday, January 23, slipping back into negative territory after posting modest gains in the previous session. The downturn was driven by profit-taking activities amid a confluence of domestic and global concerns, including ongoing geopolitical tensions, caution ahead of the upcoming Union Budget 2026, and mixed third-quarter earnings results from corporate India.
Benchmark Indices Register Sharp Declines
The benchmark indices ended the trading week on a distinctly bearish note. The Sensex tumbled 770 points, or 0.94%, to settle at 81,537.70. Similarly, the Nifty 50 declined by 241 points, or 0.95%, closing at 25,048.65. This marked a weekly decline of nearly 2.5% for the Nifty, reflecting heightened volatility and persistent selling pressure.
"The benchmark indices ended the week on a bearish note, with the Nifty 50 closing around 25,050, declining nearly 2.5% amid heightened volatility," noted Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi.
Sectoral and Broader Market Performance
Sectoral performance remained broadly weak across the board. The metals sector emerged as the sole outperformer, gaining close to 1%, while all other major sectoral indices closed in the red. The broader markets experienced even sharper pressure, with the BSE Midcap index plunging approximately 4% and the BSE Smallcap index dropping around 6%, indicating pronounced risk aversion among investors.
In parallel, the Indian rupee weakened to a fresh record low against the US dollar, adding to the overall market nervousness.
RBI Announces Liquidity Infusion Measures
In a key development aimed at stabilizing financial conditions, the Reserve Bank of India announced a liquidity infusion of over ₹2 lakh crore through multiple measures. This intervention is designed to ease financial conditions and provide support to the banking system, potentially helping to cushion the market decline.
"Meanwhile, the rupee slipped to a fresh record low. In a key development, the Reserve Bank of India announced liquidity infusion of over ₹2 lakh crore through multiple measures, aimed at easing financial conditions and supporting the banking system," added Dongre.
Market Outlook and Technical Analysis for Next Week
Nifty 50 Technical Perspective
According to Ganesh Dongre, the Nifty has entered an oversold zone but continues to face selling pressure, hovering near a two-month low. However, supportive derivatives indicators, such as the Put–Call Ratio (PCR) standing at 0.75, suggest limited downside from current levels.
"The recent RBI liquidity measures could help arrest the ongoing decline in Nifty and Bank Nifty, potentially paving the way for a recovery toward the psychologically important 25,600–26,800 zone in the coming weeks, especially with the monthly expiry and the upcoming US Federal Reserve meeting," Dongre explained.
He cautioned that uncertainty surrounding global tariff developments may cap aggressive upside moves, advising caution at higher levels. Immediate resistance for the Nifty is seen in the 25,600–25,800 zone, where supply pressure is likely to emerge.
Bank Nifty Outlook
For the Bank Nifty, Dongre highlighted that immediate resistance is placed near 59,500, with the highest Call open interest at 59,500 and the highest Put open interest at 58,000.
"Overall, the market outlook remains cautious, with a constructive bias emerging only if Nifty sustains above the 25,600–25,800 zone and Bank Nifty holds above 58,000," he stated.
Trading Strategy Recommendations
Dongre advised traders to adopt a buy-on-dips approach, remain selective in stock picking, focus on relative sector strength, and closely monitor global cues and geopolitical developments for clearer directional signals.
Weekly Stock Recommendations: Buy or Sell
Based on technical analysis, here are specific stock recommendations for the coming week:
- L&T Finance: Buy in the range of ₹284-288, with a target price of ₹300 and a stop loss of ₹275.
- Steel Authority of India: Buy in the range of ₹145-148, with a target price of ₹160 and a stop loss of ₹142.
- Canara Bank: Buy in the range of ₹148-152, with a target price of ₹160 and a stop loss of ₹142.
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.
