Indian markets rally despite Trump's tariff threat; key levels to watch

The Indian stock markets bounced back sharply on Thursday, with the Sensex rising over 700 points and the Nifty reclaiming the 22,300 mark. This relief rally followed a 10-day losing streak and was supported by technical factors, easing crude prices, and buying interest at lower levels.

Technical factors drive recovery

Indian equities rebounded after five months of consecutive declines, with the Nifty finding strong support in the 21,800–22,000 zone. "Markets saw a much-needed rebound, gaining over a per cent amid mixed cues. The session started on a positive note, driven by strength in select heavyweights, which gradually lifted sentiment across broader markets," said Mr. Ajit Mishra, SVP, Research, Religare Broking Ltd. He noted that metal, energy, and auto stocks were among the top gainers, with broader indices surging nearly 2.5 per cent each.

According to Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd., the rebound aligns with a key demand zone and multiple technical indicators. "The index has multiple supports in the 21,800–22,000 zone, aligning with the 100-week EMA, an AB=CD Harmonic pattern, and a key demand zone. Breadth and Momentum indicators have reached extreme oversold readings, reinforcing the rebound," he said.

Short-term levels to monitor

The Nifty formed a bullish belt holding a candlestick pattern, indicating strength. The 100-week Simple Moving Average (100-WSMA) near 21,900 remains a crucial support level. "Till the index holds the support of 21,800, a short-term pullback towards 22,300-22,500 could be possible. On the higher side, 22,500 will act as immediate resistance for the index. Thus, traders are advised to use this pullback for profit booking," Yedve added.

Bank Nifty also recovered, closing at 48,245 after defending the 47,840 demand zone. "The index has formed a bullish candle on the daily chart, indicating strength. However, 49,000 will remain a challenging barrier for the index," he noted.

Outlook: Will the rally be sustained?

While the rebound has lifted sentiment, analysts remain cautious. "The Nifty may face resistance around the 22,500-22,700 zone if the recovery continues. Amid this setup, we maintain a stock-specific approach, favouring banking, financials, and metals for long trades while remaining selective in other sectors," Mishra said..