The Indian stock market has recently witnessed a remarkable surge, marking its best weekly performance in four years. This rally was driven by a positive shift in foreign investor sentiment and growing optimism regarding potential advancements in trade discussions between the US and Japan concerning mutual tariffs. The leading domestic equity indices, Sensex and Nifty 50, both gained 2% in the last trading session, extending their winning streak to four days during this holiday-shortened week.

A Strong Market Performance

During this impressive week, the BSE Sensex soared by 1,508.91 points, or 1.96%, surpassing the 78,000 threshold to close at 78,553.20. Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, commented, "The market experienced a strong recovery, gaining over 4.5% during the holiday-shortened week, buoyed by encouraging signals from both local and global markets. The benchmark indices opened sharply higher and continued to build on their gains throughout the week."

Key Factors Behind the Rally

Several factors contributed to this bullish trend:

• Postponement of Tariffs: Optimism grew around the delay of certain tariffs and newly granted exemptions on specific products.
• Favorable Weather Reports: Updates indicating a normal monsoon added to the positive sentiment.
• Easing Inflation: A decline in retail inflation raised hopes for potential cuts in policy rates.

All major sectors played a role in driving the market upwards, with the real estate, banking, and financial sectors leading the charge. Broader indices also performed well, each climbing over 4%, showcasing the rally’s widespread strength.

Upcoming Events to Monitor

Looking ahead, investors will be focused on the earnings reports from prominent companies, including HDFC Bank and ICICI Bank. Other significant firms expected to unveil their quarterly results include HCL Technologies, Axis Bank, Hindustan Unilever, and Maruti.

In the derivatives market, the expiration of April series contracts may lead to increased volatility. Additionally, global developments concerning tariffs will be closely monitored for potential impacts on international markets.

Technical Insights for Nifty

According to Ajit Mishra, Nifty has been fluctuating within a range of 21,700–23,800 over the past two months and has now reached the upper end of that range. Having reclaimed crucial moving averages—the 100 and 200-day EMAs—the current upward momentum is expected to persist, with potential targets set between 24,250–24,600. In the event of a pullback, the 23,000–23,300 range may provide robust support.

Mishra also pointed out a significant decline in the India VIX, indicating a decrease in market anxiety after recent volatility. The banking sector, in particular, is on the verge of reaching new record highs, with the earnings reports from HDFC Bank and ICICI Bank likely to offer valuable insights for future market movements.

Strategic Trading Recommendations

Mishra suggests that investors adopt a "buy on dips" strategy while Nifty stays above the 23,000 mark. "With the current recovery trend expected to continue, a prudent approach is to buy during dips. Sectors sensitive to interest rates, like banking, financial services, auto, and real estate, should be prioritized, while selective investments in other sectors are encouraged. Notably, broader market participation indicates a strengthening bullish sentiment, emphasizing the importance of focusing on fundamentally sound stocks, especially during earnings season," he concluded.

As investors gear up for the following week, keeping an eye on these developments and industry trends will be crucial for navigating the dynamic landscape of the Indian stock market.