Sensex, Nifty snap three-day losing streak; IT stocks lead recovery

Sensex and Nifty ended their three-day losing run on Monday, bolstered by a sharp recovery in IT stocks, notably Infosys and HCL Technologies. The move was supported by improved global sentiment as progress toward ending the US government shutdown lifted investor confidence. HCL Engineering’s shares soared 12% to a record high following a robust second-quarter result and the announcement of a major new order. Sensex rose 319 points to close at 83,535 and Nifty50 added 82 points  to end at 25,574.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities said, "The market faced minor weakness at the highs of 25,650 and slipped into decline towards the end. A long bull candle was formed on the daily chart on Monday with upper shadow, which indicates bounce back in the market from near the crucial supports. The overall trend of Nifty remains positive and any weakness down to 25400-25300 could be a buy on dips opportunity. A decisive move above 25700, Nifty could advance towards 26000 levels in the near term."

Dreamfolks Services surged 10% on news of an acquisition in the hospitality sector. Nykaa, Nalco, Uno Minda, and Torrent Pharma also posted gains ranging from 5% to 10% owing to strong earnings.

The defence sector drew attention with Hindustan Aeronautics Ltd (HAL) and Bharat Dynamics Ltd (BDL) advancing 4–5% on healthy volumes. Among financials, Muthoot Finance benefitted from rising gold prices, climbing over 3%, while Bajaj Finance rose 2% ahead of its quarterly results.

In contrast, Trent emerged as the steepest Nifty loser, shedding 7% after muted Q2 results. Amber Enterprises slid 3%, NCC dropped 4% following its withdrawal of FY26 guidance, and several hospital stocks remained weak due to regulatory pressures on price hikes.

 Vinay Rajani, Senior Technical & Derivative Research Analyst, HDFC Securities said, "Nifty Index appears to have entered a consolidation phase, with the 50 DEMA at 25,338 acting as a support level and swing highs of 25,680 and 25,803 serving as resistance points."

Overall, market breadth was slightly tilted towards declines, with the advance-decline ratio at 1:1, signalling mixed investor sentiment despite the Sensex’s positive finish.

Ajit Mishra – SVP, Research, Religare Broking said, "Markets began the week on a positive note amid optimistic global cues. Moreover, FIIs turning net buyers after six consecutive sessions of selling, along with global brokerage Goldman Sachs upgrading India to 'Overweight' from 'Neutral', further added to the positive sentiment." 

"Nifty registered a close tag below its 20-day EMA i.e. around 25587, which does not favour bulls. Technically, as long as the index holds above the 25,300 mark, a phase of consolidation at current levels cannot be ruled out. However, a decisive breach below this support could trigger profit-taking, dragging the index towards the 25,150–25,050 zone. On the upside, a sustained move above 25,600 would be essential for a further rally towards the 25,800–26,000 region. Participants are advised to adopt a stock-specific approach, accumulate quality stocks on dips, and keep selective shorts as a hedge," added Mishra.