The Diwali week has infused fresh optimism into the markets. The Indian markets commenced the new Samvat positively, with benchmarks reaching a new 52-week high during the week, marking the fourth consecutive week of gains for the first time in 2025. This uplift in market sentiment was driven by stronger-than-expected Q2 earnings from major corporations, foreign institutional investors (FIIs) becoming net buyers, easing tariff tensions between the US and China, and renewed hope surrounding a potential trade deal between India and the US following President Trump’s call to PM Modi during Diwali. Over the week, the Sensex rose by 259.69 points or 0.30 percent, closing at 84,211.88, while the Nifty increased by 85.3 points or 0.33 percent, ending at 25,795.15.
In the broader market, the BSE Mid-cap Index climbed by 0.5 percent, and the BSE Small-cap Index saw an almost 1 percent increase. Notably, the Nifty has rallied over 1,500 points from its low of 24,588 in just 15 trading sessions during October. During the week, FIIs were modest net buyers, purchasing equities worth Rs 342.74 crore, while domestic institutional investors (DIIs) maintained their buying streak for the 27th week, with purchases totaling Rs 5945.31 crore. The Indian rupee appreciated by 12 paise, finishing the week at 87.85 per dollar. The announcement of investments exceeding Rs 50,000 crore from large foreign institutional investors in India’s financial and banking sectors has also enhanced market sentiment.
Record festive sales highlighted a rise in consumer demand this season, driven by robust household spending and GST-fueled affordability. However, caution emerged on the macroeconomic front, with the output of eight core industries slowing to 3 percent in September 2025, down from 6.5 percent in August. The precious metals market experienced significant volatility, enduring its steepest single-day decline in over a decade, influenced by profit booking and a strengthening US dollar. Crude oil prices surged sharply due to new sanctions from the US and EU against Russian oil majors, igniting concerns over tightening global supply and renewed inflation worries. This scenario poses risks for India, as rising crude prices may exacerbate the fiscal deficit and elevate the import bill.
Looking ahead, the Indian stock market is expected to consolidate with a positive bias, supported by strong DII inflows, Q2 earnings, and global cues, including a potential 25 basis points rate cut by the US Federal Reserve and hints of a December cut from the RBI’s MPC minutes. Continued FII inflows and optimistic management commentaries could help maintain positive market momentum, although periodic profit booking remains a possibility. Many investors focus on robust companies capable of weathering challenging economic conditions rather than attempting to predict the timing of recessions or market crashes. In the futures and options segment, after a positively driven week, the Nifty concluded with a modest gain amid profit booking in the latter half.
The Bank Nifty finished flat. The Nifty approached its all-time high, raising hopes for a fresh breakout, but could not sustain the momentum and faced profit booking, indicating that investors may be becoming cautious after the sharp rise. In the options segment, the highest Call open interest for Nifty was noted at the 26,000 and 25,900 strike levels, while significant Put open interest was concentrated at the 25,500 and 25,700 strikes. For Bank Nifty, considerable Call open interest was observed at the 58,000 strike, alongside substantial Put open interest at the 57,000 strike. Implied volatility (IV) for Nifty’s Call options settled at 10.82 percent, while Put options ended at 11.57 percent.
The India VIX, a crucial measure of market volatility, closed the week at 11.73 percent. The Put-Call Ratio Open Interest (PCR OI) was recorded at 0.83 for the week. Although the technical structure shows improvement, the breakout remains unconfirmed until there is a strong follow-up above 25,900. Key support for the Nifty is positioned at 25,500–25,400, while resistance levels are identified near 26,000 and 26,200. In the upcoming week, market participants are advised to adopt a cautiously optimistic stance. Traders should refrain from overly aggressive positions, taking a prudent approach to manage existing holdings, protect gains, and employ a selective, stock-specific strategy while closely monitoring broader index behavior around breakout levels.
A buy-on-dips strategy is recommended, with attention to open interest positions that could steer market direction in the coming sessions. From a technical standpoint, several sectoral indices are exhibiting signs of ongoing strength and are expected to outperform in the short term. Leading sectors include Nifty Metal, IT, CPSE, Realty, and Oil & Gas, which have demonstrated resilience even during broader market pauses. Stocks showing strong potential include Axis Bank, Bajaj Finance, NALCO, Shriram Finance, PNB Housing, and Naukri. Conversely, stocks facing challenges include Ambuja Cement, Adani Enterprises, Exide Industries, Marico, Pidilite, and Ultratech.
