NIFTY SHOWING SIGNS OF STRENGTH: SECTORAL ROTATION FAVORS BANKING — POTENTIAL KEY DRIVER FOR MARKET RECOVERY

Every set back has been beaten up by the bulls last week. Nifty though hit the new lows of 22182.55 but managed to give a bullish closing possibly bottom formation as of now is done. As RBI’s intervention has lead to a sharp recovery of Rupee towards 92.614 & gave a decisive close at 92.710 it has created a positive momentum into the banking & financial sector & a possible short term bottom formation can be expected as of now. Both Nifty & Bank Nifty formed a possible Doji kind of pattern on Weekly charts at the bottom which usually resembles the trend reversal kind of pattern on the previous weeks high is breached then this theory would become an impactful truth.
Brent crude oil though remained volatile throughout the week. It continues to show the signs of a reversal pattern forming Doji on top of the Weekly charts. Unless it closes above 120$ per barrel we remain either sideways or bearish stance with a view of it sustaining within the possible range of 95-105$ per barrel as of now.

One thing here remains the same FII’s continuously remained on the sell side which hit’s record high of massive Rs.1,22,540.41 cr. in the month of March 2026 which remains biggest sell off after Covid’19 crash of March’20. Meanwhile DII’s now became biggest supporter of the entire move with massive buying of Rs.1,42,960.37 cr. FII’s now once again turned the table where on 23^rd Jan.’26 was highest at 2.28 Lacs which eventually came down to as low as 1.03 lacs but closed the last week net shorts risen to 2.68 lac contracts initially it looked like they may come with positive bias but the substantial form may now looks like incremental shorts have been created which means more pain or an indecisive move could be from their side.

Precious metals once again shown strength as geopolitical issues rise again. Earlier Gold corrected nearly 24.67% from its recent highs of 180779 to hit a low of 136185 a biggest decline in a single week while it now remained inline with nominal gain last week while in Silver which made highs of 420048 & gave a vertical dive towards 225805 a single-handed fall of nearly 46.25% a biggest fall in the history within 2 weeks’ time frame. This sell off may now once again show further weakness towards 1.70 lacs in silver & 1.34 lacs in Gold on MCX within next few weeks.

FII’s have been into net sell in 9 months out of 12 in current Fiscal year 2025-26 creating ruckus pressure on the entire markets. In the traders / investors community it has now become a basic question why they are selling? & When this selling would stop?

Why FII’s have been continuously selling in Indian Markets?

As the geopolitical issues continue to rise as US-Israel-Iran war leads a continuous decline in Rupee which hit all time low of 94.988 followed by inconsistent government policies into taxation in the capital markets & other things. Add on burden on the markets in respect to STT rate hike continuous pressure on FnO volumes reduction.

In recently launched GDP growth rate of India in Q2 has been 8.20% while it is being projected that it will grow at 7.30% in the Fiscal year 2025-26 while USA has recently shown a GDP growth rate of 4.40% which is furthermore projected to grow at 4.70% so for a Developed economy which is showing nearly 5% of growth lately whereas target country which is still a Developing country with a projected growth rate of 7.60% but its currency is declining on a fast scale why would any institutions go for a Emerging Markets when it can get a growth of nearly 5% in an already developed nation while saving currency devaluation risk. Isn’t it a safer investment for them?

Well, ofcourse yes this could have been a major reason for FII’s to relentlessly sell into the Indian Equity markets.

It has been more than 18 months now starting from October 2024 when Indian markets have consistently remained under pressure & each time some new news item comes to put the additional pressure on the domestic equity markets.

Last week Nifty has shown volatile moves on both the sides wherein bulls tried to win the moves by giving a probable bullish closing on weekly charts by forming Doji kind of pattern on the probable bottom. If in the coming week 22000-22200 held decisively then a move towards 23800-24300 could be possible in April series itself. This time Bank Nifty may support the broader markets followed by Real Estate sector & Reliance Industries.

However, Bank Nifty despite the sell off by FII’s of Rs. 31,831 cr. worth of equities into the financial sector a possible buying interest could immerge 54000-55500 kind of levels from CMP 51548.75 while crucial supports remain at 48000-49000 kind of levels. This time both PSU & Private banks may support the index.

Nifty IT may continue to find its crucial support at within the range of 26000-28000 kind of levels while a recovery could be seen towards 32000-32800 kind of levels on an immediate basis.

We clearly mentioned earlier that Nifty’s pressure only resembles the pressure of political will rather than fundamental one. FII’s selling has kept its pressure intact to the Indian domestic Equity markets as it went lesser last month the real realization came forward & now the Indian markets growth story rises & the politically backed selling with pressure from the Trump administration to diminish the Indian markets & create an artificial pressure to put an end to the Indo-Russia friendship remains untouched.

India remained on the higher ground on GDP data front where it achieved a milestone with historic growth rate of 7.80% in Q1, 8.20% in Q2 & 7.80% in Q3 of FY 25-26 completely mocking Trump’s “Dead Economy” jibe at its face where India remained on the Top-notch developing economy set for a target of $25 Trillion economy by 2047 on track. However, chairman of Reliance Industries Limited Mr. Mukesh Ambani said in its latest AGM last week that India has the capacity to achieve 10% GDP growth annually which once again has set another long-lasting futuristic goal for the entire economy.

FII & DII’s monthly data so far in the FY 2025-26 has been interesting where FII’s bought in few months initially then abstain from buying or remained to being on the sell side while DII’s remained the biggest supporter of the broader markets. The data below mentioned:

Brent Crude may formed double top at 119-120$ per barrel levels no major upside seen till it sustains below this. Meanwhile, initial support range remains stagnant at 95-105 kind of levels

The Indian Equity markets have gained many recent news items where major of the news items are mentioned below:

• Rupee may now become stable within the range of 90-92.

• Dollar Index may remain neutral in between 100-101 kind of levels.

• Brent Crude may formed double top at 119-120$ per barrel levels no major upside seen till it sustains below this. Meanwhile, initial support range remains stagnant at 95-105 kind of levels.

On the other side FII’s net longs now near to 13-15% & a recovery is possible towards 24%-27% till the coming weekend which continuously signifies & now support could be within the range of 22000-22200 in Nifty.

In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:

Domestic News:

1. India’s “War Shield”: The Indian government is reportedly preparing a ₹2.5 lakh crore “Covid-like” financial trigger to blunt the economic shock of the ongoing West Asia war.

2. GST & UPI Surge: March data shows resilient domestic consumption with GST collections rising 8.2% to ₹1.78 lakh crore and UPI transactions hitting a record 22.64 billion.

3. Tata Group Warning: Chairman N. Chandrasekaran has warned Tata executives to prepare for a “tougher business environment” and significant supply chain disruptions due to the conflict

4. Adani Group Milestone: Adani Ports (APSEZ) has crossed the 500 million tonnes cargo milestone and set an ambitious target of 1 billion tonnes by 2030.

5. ISRO Mission MITRA: ISRO has launched “Mission MITRA,” a dedicated program focused on the safety and support of crew members for future human spaceflight missions.

6. New Income Tax Act: The Income Tax Act 2025 has officially come into effect, simplifying terminology (e.g., replacing ‘Assessment Year’ with ‘Tax Year’).

7. IndianOil Supply Stability: Amid global tensions, IndianOil has assured that LPG supplies remain stable and warned consumers against panic booking.

8. Formal Credit Expansion: Borrowers may soon be able to tap into formal credit via the “ULI app” (Unified Lending Interface) across various lending segments.

9. Rupee Outlook: The RBI has implemented measures to delay the rupee’s slide, though analysts suggest it may struggle to stay above the 93 level against the USD.

10. Corporate News: Nandita Sinha has resigned as the CEO of Myntra. Meanwhile, Tata Group leadership is reportedly meeting to assess the fallout of the West Asia crisis on their global operations.

11. E20 Fuel Mandate: New regulations now require petrol pumps to dispense E20 (20% ethanol-blended) fuel with a minimum 95 RON octane rating.

12. CBI Crackdown: Two officials from the Archaeological Survey of India (ASI) were arrested today in a bribery case related to construction permissions at Jantar Mantar.

13. Corporate Fraud: The Karnataka High Court declined to quash FIRs in a major ₹40-crore loan fraud case, signaling a strict stance on financial irregularities.

14. RBI Monetary Policy Outlook: Ahead of the MPC meeting scheduled for April 6-8, experts suggest the RBI is likely to maintain a “pause” on the repo rate at 5.25%. Concerns over global energy prices and inflation due to geopolitical tensions remain the primary drivers..

 International news:

1. State media reported that Kuwait Petroleum confirmed fires at the Mina Al‑Ahmadi refinery following a drone strike early Friday, with no casualties reported. Emergency teams responded quickly, and some refinery units were shut down as a precaution.

2. SpaceX IPO: Reports suggest Elon Musk’s SpaceX is eyeing a valuation of approximately $1.75 to $2 trillion in its upcoming IPO.

3. Maritime Blockade: Iran’s parliament has hinted at expanding maritime blockades beyond the Strait of Hormuz to include the Bab el-Mandeb Strait, further threatening global shipping routes.

4. Japan’s order for Tomahawk missiles delayed due to U.S. use in Iran – Bloomberg.

5. State media reported that Kuwait Petroleum confirmed fires at the Mina Al‑Ahmadi refinery following a drone strike early Friday, with no casualties reported. Emergency teams responded quickly, and some refinery units were shut down as a precaution.

6. US-Iran War (Day 35): Tension remains high as the Strait of Hormuz remains blocked. Donald Trump has warned of strikes on Iranian “bridges and power plants,” while Iran has vowed “crushing” retaliatory attacks. Reports also suggest Iran claims to have shot down a US F-35 jet.

7. Energy Security: India’s Russian oil imports have surged by 90% as the Hormuz disruption forces a shift in supply chains. Interestingly, a tanker carrying Iranian crude originally destined for India reportedly shifted course to China.

8. US-Iran War Impact: President Donald Trump hinted at a potential end to military operations in 2–3 weeks but warned of aggressive strikes in the interim. Crude oil prices have surged, with Brent jumping toward $108–$110 per barrel.

9. SpaceX Valuation: Elon Musk’s SpaceX is eyeing a valuation of over $2 trillion in its upcoming IPO.

10. Trump warns US military, the world’s strongest, hasn’t begun destroying Iran’s remaining assets and will target bridges next, followed by electric power plants.

11. China on Palestinian Laws: Beijing expressed concern over new Israeli legislation regarding the death penalty for Palestinians, urging all parties to avoid actions that “exacerbate confrontation.”

12. Trump Family Business: A drone interceptor company backed by Eric Trump and Donald Trump Jr. is reportedly seeking deals to sell defense technology to Gulf states currently under attack.

13. OpenAI Funding: News is circulating regarding OpenAI’s massive $122 billion funding round, which has valued the company at $852 billion, a story closely watched by Asian tech hubs.

14. Nvidia & Marvell: Nvidia has deepened its regional footprint by investing $2 billion in Marvell, focusing on accelerating AI infrastructure partnerships despite broader market volatility. 

Last week Nifty made low’s of 22182.55 to give a close at 22713.10. Nifty has shown volatile moves on both the sides wherein bulls tried to win the moves by giving a probable bullish closing on weekly charts by forming Doji kind of pattern on the probable bottom. If in the coming week 22000-22200 held decisively then a move towards 23800-24300 could be possible in April series itself. This time Bank Nifty may support the broader markets followed by Real Estate sector & Reliance Industries.

However, Bank Nifty despite the sell off by FII’s of Rs. 31,831 cr. worth of equities into the financial sector a possible buying interest could immerge 54000-55500 kind of levels from CMP 51548.75 while crucial supports remain at 48000-49000 kind of levels. This time both PSU & Private banks may support the index.

Nifty IT may continue to find its crucial support at within the range of 26000-28000 kind of levels while a recovery could be seen towards 32000-32800 kind of levels on an immediate basis.

Sensex may continue to find its crucial support levels at 71000-72000 kind of levels in the coming week ahead while immediate target may now remain at 77000-78000 kind of levels.

Nifty Financials may find its crucial support levels at 23000 while immediate target lies at 26000-26500 kind of levels.

As of January 2026 the number of Demat Accounts has hit whopping 21.6 crores this not only helps the capital markets directly but also directly to Equity investments.

The monthly SIP in Indian markets now raised towards Rs. 31,002 cr. per month as on December 2025.

 Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  22713.10
Nifty Potential Upside: 23800-24300
Nifty Immediate Crucial Support: 22000-22200

Sensex CMP: 73319.55
Sensex Potential Upside: 77000-78000
Sensex Immediate Crucial Support: 71000-72000

Bank Nifty CMP:  51548.75
Bank Nifty Immediate Upside: 54000-55500
Bank Nifty Immediate Crucial Support: 48000-49000

Nifty Financial CMP: 24041.55
Nifty Financial Immediate Target: 26000-26500
Nifty Financial Immediate Crucial Support: 23000

Nifty IT CMP: 30441.45
Nifty IT Immediate Target: 32000-32800
Nifty IT Immediate Crucial Support: 26000-28000

Stock on Radar:
Large Caps:

• Reliance Industries (CMP 1351): This large-cap giant looks good to add here at 1351 with strict SL placed at 1300 for an estimated possible upside towards 1500 in short run.

• Kotak Mahindra Bank (CMP 358): This large-cap private sector bank may move towards 380-400 in no time from CMP 358 with strict SL placed at 340.

• HDFC Bank (CMP 751): This large-cap private sector bank looks good to add here for a possible reversal from CMP 751 with strict SL placed at 680 for a potential upside towards 855 in 3 months time frame.

About the Author:
Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 13+ years exploring in depth analysis of the Equity & Derivatives.
He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

Email I’d: contact@vgstockresearch.com
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