Market outlook: Futures and options expiry, FII data and global cues key factors next week

Mumbai: The stock market witnessed a sharp rally last week driven by the US Fed Reserve's rate cut. Next week's market outlook depends upon several factors likeforeign institutional investors(FIIs) activities, futures and options (F&O) monthly expiry, crude oil prices and global macroeconomic data.

Last week's market highlight was aggressive buying by the FIIs. They were net buyers, injecting Rs 11,517.92 crore into the cash segment. Conversely, Domestic Institutional Investors (DIIs) turned net sellers, offloading Rs633.67 crore in the cash segment.

In the last trading session, Nifty and Sensex climbed to all-time highs of 25,849.25 and 84,694.46, respectively, before closing the week at 25,790.95 and 84,544.31. The Bank Nifty index also showed strength, taking 11 weeks to reach a new peak of 54,066.10.

Among sectoral indices, the construction sector emerged as the top performer, followed by banking, while the pharmaceutical sector ended the week in negative territory. The U.S. Federal Open Market Committee (FOMC) voted 11 to 1 in favour of lowering the federal funds rate by 50 basis points to a range of 4.75 per cent to 5 per cent, marking the first rate cut after more than a year of maintaining rates at a two-decade high.

Interestingly, the usually strong IT index underperformed, ending the week with a 2.75 per cent decline. On the other hand, Nifty Bank, which had lagged, took the lead, gaining 3.5 per cent and finally reaching its all-time high. Midcap and Smallcap indices also underperformed during the week. The market displayed clear signs of sector rotation, as investors shifted focus to sectors with renewed momentum.

Santosh Meena, Head of Research, Swastika Investmart said, "Nifty is trading in uncharted territory, with 25,921 and 26,244 as the next target levels. On the downside, 25,350 has emerged as a crucial support level for the NSE benchmark, and the bullish momentum is expected to persist as long as Nifty remains above this level."

According to Palka Arora Chopra, Director of Master Capital Services, Nifty Bank Index reached a new all-time high of 54,066.10, forming a strong bullish candle on the weekly charts and closing above previous highs.

"This signals fresh momentum, primarily driven by private-sector banks. The index will likely continue its upward trajectory toward 55,000, with minor resistance at 54,300. On the downside, immediate support is at 53,200, and a breakdown below this level could push the index toward 52,500," Chopra mentioned.