Buoyedby collective factors like renewed buying from FIIs, continued DIIs buying, falling international crude oil prices, upward revision in India’s GDP growth forecast by IMF and optimism over US Fed rate cut; markets posted their biggest weekly gains in four months on improved investor sentiment during the week ended. For the week, the Sensex surged 1451.37 points or 1.75 percent to close at 83,952.19 and the Nifty added 424.5 points or 1.67 percent to finish at 25,709.85. The mixed performance from broader indices continued in the second week, underperforming the benchmarking indices, with the BSE Smallcap index falling 0.6% and the BSE Mid-cap Index ending flat. On the sectoral front, Nifty Realty index gained 4%, Nifty Capital Markets index added nearly 4%, Nifty FMCG index rose 3%, Nifty Auto index rose 2%, while Nifty Media index shed 2.7%, Nifty IT index fell 1.8%, Nifty Metal and PSU Bank indices declined 0.5% each. FIIs remained net buyers for better part of the week but were net sellers of equities worth Rs 586.76 crore.

On the other hand, DIIs continued their buying on 26th week with equity purchases worth Rs 28,044.45 crore. Indian rupee after kissing its all-time low of 88.50, made strong comeback from the lows, posting biggest weekly gains versus the dollar since late June. The Indian rupee ended 72 paise higher at 87.97 per dollar. Credit rating agency S&P highlighting India’s resilience against global trade shocks projected steady economic growth and validated the country’s sovereign rating upgrade. Upward revision in India’s GDP growth forecast for 2025-26 to 6.6 per cent, up from its earlier estimate of 6.4 per cent by IMF has reinforced strong underlying economic fundamentals. Market optimism was bolstered by clarity in India–US trade relations, with both sides tentatively agreeing to conclude the first phase of the deal by November. However, investors stay cautious amid US government shutdown worries, US-China trade tensions and renewed banking sector jitters. With the October series turning out to be one of the strongest in recent months and the Sensex up nearly 4.6% month-to-date; the durability of it hinges on earnings quality, global central bank actions, and whether the technical overbought conditions can be managed without a significant correction. Investors should celebrate the festive gains, but keep their portfolios hedged for the unexpected. The week ahead will be a holiday-led truncated week on account of Diwali. Investors are also likely to remain cautious in view of key macroeconomic data announcements and important corporate Q2 results in coming week. Adopt a buy-on-dips approach with a focus on sectors demonstrating consistent earnings visibility. Within the broader market, preference should be given to fundamentally sound large and midcap stocks over smallcaps.

Do your homework before making a decision. Once you’ve made a decision, make sure to re-evaluate your portfolio on a timely basis. A wise holding today may not be a wise one in the future.

FUTURES & OPTIONS / SECTOR WATCH

Mirroring the market action in the underlying cash market, mild exuberance was seen in the derivative segment. Market received its festive gift “Nifty@52 week high” and benchmark indices did a good “pole vault” over-all near-term resistances. The Bank Nifty posted a new all-time high. The Bank Nifty’s move to a new all-time high reflects the market’s underlying strength. In the options segment, the highest Call open interest for Nifty was observed at the 26,000 and 25,800 strike levels, whereas notable Put open interest was concentrated at the 25,500 and 25,600 strikes. For Bank Nifty, significant Call open interest was seen at the 58,000 strike, with substantial Put open interest at the 57,000 strike. Implied volatility (IV) for Nifty’s call options settled at 9.91%, while put options concluded at 10.56%. The India VIX, a key indicator of market volatility, concluded the week at 10.86%. The Put-Call Ratio Open Interest (PCR OI) stood at 1.05 for the week. Key support zones for the Nifty are pegged at 25,550-25,350 and resistance levels stand at 26,000 & 26,300. Bank Nifty traders should watch the 57,000 level closely; a break below it could trigger a broader unwinding. The market enters the new week with an optimistic outlook. Cooling inflation, robust domestic macro fundamentals, and strong earnings momentum may propel the Nifty beyond 26000 level easily. October 21 will see the one-hour Diwali Special Muhurat Trading session, marking the beginning of Samvat 2082, which will be closely watched for sentiment cues and festive cheer.

Stocks looking good are 360 One, HFCL, Federal Bank, Britannia, Prestige, Sun Pharma and Wipro. Stocks looking weak are Amber, Infosys, IGL, IRFC, Policy Bazar, Tata Technologies, PPL Pharma and OFSS.

(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)