The Indian stock market recorded sharp gains on Friday, with Sensex and Nifty rising more than 1% to end the week on a positive note. Strong Q1 earnings, sharp buying in IT stocks and other factors boosted investor sentiment despite the global market crash.

The Sensex surged over 964 points to close at 78,151, while Nifty 50 gained around 262 points to end the session at 24,334. The rally occurred despite weakness in the broader market, with the Nifty Midcap 100 and Nifty Smallcap 100 indices declining up to 0.4%.

Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty and IT, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Last week, the benchmark index Nifty traded within a narrow range of just 367 points, marking its smallest weekly trading range since December 2025. More importantly, the index has remained confined to the 24,530-23,785 zone for the past five weeks, forming a series of small-bodied, indecisive candles on the weekly chart. This price action reflects a clear lack of conviction from both bulls and bears, with neither side willing to take decisive control. But history suggests that such prolonged indecision rarely lasts for long.

The subdued price movement has also resulted in a Bollinger Band Squeeze on the daily chart—a phenomenon that occurs when volatility contracts sharply and the Bollinger Bands narrow. Such periods of low volatility are often followed by a significant directional move. Momentum indicators are also echoing the same message. The daily RSI and Stochastic Oscillator continue to move sideways, while the trend strength indicator, ADX, has slipped to 10.56, its lowest reading since July 2021. Collectively, these indicators suggest that the market is lacking directional strength. The only question now is—which side will seize control when volatility returns?

With several index heavyweights, including Reliance Industries, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, set to announce their quarterly earnings over the weekend, all eyes will be on Monday's trading session. The market's reaction to these earnings could determine whether Nifty finally breaks out of its prolonged consolidation.

From a technical perspective, the 24,500-24,550 zone remains the immediate hurdle, as it coincides with the previous swing highs. A decisive move above 24,550 could trigger a fresh rally towards 24800, followed by 25,000 levels in the short term. On the downside, the 20-day EMA zone of 24,100-24,050 is expected to provide strong support.

The banking benchmark index, Bank Nifty, has been consolidating within a broad range of 58,706-56,549 over the last 23 trading sessions. However, the index is now approaching the upper end of this range and appears to be on the verge of a decisive breakout from its prolonged consolidation phase.

From a technical standpoint, Bank Nifty is trading comfortably above its key moving averages, reflecting a positive underlying trend. Momentum indicators and oscillators continue to support the bullish setup. The daily RSI is currently placed above the 60 mark and remains in an upward trajectory, indicating strengthening buying momentum and improving market sentiment.

The upcoming trading session on Monday assumes greater significance, as several heavyweight constituents of the index, including HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank announced their quarterly earnings. Given their substantial weightage in the index, the earnings outcome is likely to play a crucial role in determining the next directional move for Bank Nifty.

On the levels front, the 58,700-58,800 zone is expected to act as an immediate resistance area, as a key horizontal trendline is positioned around these levels. A sustained breakout above 58,800 could trigger a fresh leg of the rally, paving the way for an upside move towards 59,500, followed by 60,300 in the short term.

On the downside, the 20-day EMA zone of 57,600-57,500 is likely to provide strong support and will remain a critical level to watch for maintaining the prevailing positive bias in the index.

What are your views on HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and Yes Bank?

HDFC Bank - The lender has been consolidating within the 828–807 range over the last seven trading sessions. The stock has been hovering around its 100-day EMA, while the RSI has remained flat, indicating a lack of momentum. The ADX is also moving sideways, reflecting the absence of a strong directional trend. A decisive breakout on either side of this range is likely to determine the stock's next directional move.

ICICI Bank - The private lender has given a breakout above its 1,433–1,366 consolidation range on the daily chart. The stock continues to trade above all its key moving averages, highlighting a strong underlying trend. The RSI has turned higher from around the 60 mark, signalling sustained bullish momentum, while the rising MACD histogram on the weekly timeframe further reinforces the positive bias. As long as the stock holds above the 1,415–1,410 support zone, the bullish momentum is likely to persist.

Kotak Mahindra Bank - The bank had been consolidating within the 385–368 range over the last eight trading sessions before delivering a breakout. The stock has reclaimed its key short-term moving averages, signalling improving price strength. The DI+ has crossed above DI- on the ADX indicator, indicating that buyers are gradually gaining control. The RSI has also turned higher, reflecting renewed bullish momentum. As long as the stock sustains above the 375–370 support zone, the ongoing pullback is likely to extend further.

How are FIIs and DIIs positioned in index futures? And what is VIX signalling?

FIIs continue to maintain a net short bias in index futures, but recent positioning indicates gradual short covering rather than fresh bearish additions. The FII long-short ratio has improved from 8.37% on July 14 to 11.01% on July 17. Over the same period, net short positions in index futures have declined from 2.65 lakh contracts to 2.16 lakh contracts, suggesting that FIIs are unwinding short positions, albeit at a measured pace.

Meanwhile, the DII long-short ratio has remained steady at around 87%, reflecting continued supportive positioning. This consistent stance from DIIs has helped absorb FII selling pressure and provide stability to the broader market. With the Nifty breaking out of its recent consolidation range, any acceleration in FII short covering could act as a key catalyst for Index to move higher.

India VIX continues to trade below its key short- and long-term moving averages, indicating that market volatility remains well contained. After surging nearly 26% on 8 July, when the Nifty declined over 500 points, the volatility index has gradually cooled alongside the recovery in equities.

Since peaking at 28.90 on 30 March 2026, India VIX has been forming lower highs and lower lows, reflecting easing fear and improving market sentiment. Technically, the 11.80–11.50 zone is a crucial support. A sustained move below this level could further ease volatility and provide a supportive backdrop for equities. On the upside, 15.30–15.50 is likely to act as immediate resistance. Overall, the trend suggests market sentiment remains constructive with volatility expected to stay under control.

What sectoral indices are looking good on the charts for next week?

Technically, Nifty Private Bank, Realty, Pharma and Healthcare are likely to outperform in the short term.

On the flip side, Nifty CPSE, PSE, Metal and PSU Banks are likely to continue their underperformance in the short term.