Benchmark indices snapped their eight-session winning streak and ended marginally in the red on Monday, as market participants adopted a cautious stance ahead of the upcoming US Fed policy announcement. Despite a 25-bps rate cut being largely priced in, all eyes remain on the Fed’s forward guidance for cues on the future interest rate trajectory and its implications for bond yields. 

The Nifty commenced the session on a muted note and registered an intraday high of 25,138 in early trade. However, the index faced selling pressure at higher levels, triggering profit-taking and ultimately settling 44.80 points lower, down 0.18%, at 25,069.20. Sectoral performance was mixed. Nifty Realty led the gainers’ pack with a robust uptick of 2.41%, while PSU Banks and Oil & Gas counters also lent support to market breadth. 

Conversely, defensive and rate-sensitive sectors such as Pharma, Healthcare, Auto, and IT bore the brunt of profit-booking, weighing on overall sentiment. Broader markets, however, outperformed the frontline indices, with the Nifty Midcap 100 rising 0.44% and the Nifty Smallcap index advancing 0.76%, indicating sustained interest in the broader universe amid sectoral rotation.

Nifty Outlook

The index formed a bear candle which remained contained inside the previous session price range, signaling consolidation amid stock-specific action. Key observation in the daily chart is that the 20 day EMA has cut the 50-day EMA from below for the first time in the entire corrective decline of the last 2 months, signaling strength. Nifty has immediate resistance at 25,200-25,250 levels being the confluence of the previous swing high and the 61.8% retracement of the entire decline (25669-24337). 

A decisive close above 25,250 would mark a trend reversal confirmation from the ongoing corrective phase and could potentially unlock further upside towards the 25,500 levels in the coming weeks. Failure to move above the resistance area of 25,200-25,250 will lead to some consolidation in the range of 25,250-24,800. On the downside, immediate support is seen near the 24,800 levels, holding above the same will keep the bias positive. While short term support is placed at 24,600-24,700 levels.

Bank Nifty Outlook

The Bank Nifty has formed a doji candle with a higher high and higher low signaling extension of the pullback for the ninth consecutive sessions. Following a phase of consolidation around the crucial 200 days moving average, the index has absorbed selling pressure and is now positioning itself at the recent breakdown area of 54,800-55,000 levels. 

Index sustaining above the breakdown area of 55,000 will open further upside towards 55,300 initially and then towards the 56,000-56150 levels in the coming weeks being the 61.8% retracement of the entire decline (57628-53561). On the downside immediate support is placed at 54,350 levels being the recent gap area. While key support is placed at 53,500 levels being the confluence of the 200 days EMA and the previous major low of May 2025.

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Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd

Indian equities ended marginally lower in a range-bound session, ahead of the US Federal Reserve’s two-day policy meet starting September 16. Globally, markets are anticipating a 25bps rate cut by the Fed, amid weak jobs data and rising pressure from the US administration. On the institutional front, foreign portfolio investors turned net buyers on Friday, adding equities worth Rs130crores. Nifty50 closed with a loss of 45 points at 25,069 (-0.2%). 

The broader market outperformed the benchmark indices with Nifty Midcap100 and Smallcap100 rising 0.4% and 0.8% respectively. Amongst sectoral indices, Nifty Realty was the top gainer, up 2.4% on account of value buying after a recent sharp correction in real estate stocks. Meanwhile, Nifty Pharma index declined by 0.6% on profit booking, snapping its four-day gaining streak. On the macro front, India’s retail inflation rose to 2.07% in Aug’25 (in line with estimates), after easing for nine consecutive months.

Further, market participants would track the US retail sales data to be released on Tuesday. Overall, we expect the market to continue its consolidation, while tracking the US Fed policy outcome and progress in India-US trade talks.