Nifty Set for Gap-Up Open; Analysts Discuss Market Outlook

Indian equity markets have experienced a notable rally recently, with benchmark indices such as the Sensex and Nifty rising more than 10 percent in recent trading sessions. This surge has been supported by a drop in crude oil prices, speculation over a possible review of long-term capital gains (LTCG) tax, and corporate earnings that exceeded expectations. After a trading holiday in India on Tuesday, the Nifty is anticipated to open with a gap-up on Wednesday, driven by continued easing of crude oil prices and positive momentum in global markets.

Pabitro Mukherjee, Deputy Vice President of Research at Bajaj Broking, expects the Nifty to start higher on Wednesday. He indicated that if the index maintains a level above 25,250, it could move upwards toward the 25,400 mark. This view aligns with the prevailing optimism fueled by factors outside the domestic market.

Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech company, also expressed confidence in the Indian equities’ ability to sustain their upward trajectory. He attributed this to a combination of easing crude prices and renewed interest from foreign portfolio investors (FPIs), both of which provide a stable environment for the domestic market.

Brent crude oil prices have fallen sharply, decreasing by over 22 percent from a recent peak near $118 per barrel. This decline helps alleviate some of the pressure on India’s energy costs, reduces imported inflation concerns, and supports the country’s external balance. Meanwhile, foreign portfolio investors have been net buyers, purchasing shares worth ₹53,172 crore in November so far, indicating robust foreign capital inflows that bolster market sentiment.

According to Ponmudi, the drop in oil prices offers relief from elevated energy expenses that have impacted inflation and the broader economy. The inflow of foreign investment has reinforced the market’s recovery by improving risk appetite and investor confidence. Technically, he believes the Nifty will retain a positive short-term bias but expects some consolidation after the rapid gains in recent weeks. Immediate resistance is seen in the 25,150 to 25,200 range, with potential for a rally toward 25,500 if this level is breached. Support levels are identified at 24,800 and 24,600, which could act as cushions in case of a pullback.

Dharmesh Bhatt, Head of Derivatives Research at Systematix Institutional Research, offered a more cautious perspective. Although the Nifty remains above the psychologically important 25,000 mark, he noted that the rally may be losing momentum. The index is encountering resistance near the gap formed in March, which could limit further upside in the near term.

Bhatt pointed out that the market is exhibiting signs of extreme sentiment and increased volatility, with foreign institutional investors slowing their short-covering activities. These factors raise the likelihood of a period of consolidation or a modest pullback. He highlighted that the Nifty remains overbought and is facing resistance around the 25,140 level, which corresponds to the March 2, 2026 gap. Previous highs, such as Monday’s peak at 25,084 and the Muhurat session high at 25,132, failed to surpass this resistance. With the index trading approximately 7.6 percent above its 50-day moving average and a divergence in market breadth, Bhatt expects the Nifty to consolidate below 25,140 for the time being.

However, Bhatt also noted that a decisive close above this resistance level could pave the way for further gains towards 25,500. This suggests that while caution is warranted, the possibility of renewed upward movement remains if key technical barriers are overcome.

These contrasting views reflect the complexities of the current market environment. The easing of crude oil prices and strong foreign inflows provide a supportive backdrop, but technical resistance and signs of overbought conditions could temper near-term enthusiasm. Investors and traders will likely pay close attention to how the Nifty performs around these critical levels in the coming sessions.

India’s equity markets have been influenced by a mix of domestic and global factors in recent months. The sharp fluctuations in crude oil prices have had a direct impact on inflation and corporate profitability. Meanwhile, foreign investment flows continue to play a crucial role in shaping market trends. As the market digests these variables, analysts emphasize the importance of monitoring technical indicators alongside fundamental developments to navigate potential volatility.