Indian benchmark indices closed higher on October 3, 2025, signaling optimism for the week ahead. The Sensex surged 223.86 points (0.28%) to 81,207.17, while the Nifty added 57.95 points (0.23%), ending at 24,894.25.
Market participants are now looking ahead to next week’s trading to see if this rebound gains momentum. Sudeep Shah, Vice-President & Head of Technical and Derivatives Research at SBI Securities, shared insights on what investors can expect.
Nifty Shows Signs of Pullback Rally
Shah said, “The benchmark index Nifty wrapped up the truncated week on a positive note, closing at 24,894 level with a gain of 0.97%, supported by a late-week rebound. On the daily chart, it formed a Record Session Count candlestick pattern and thereafter started witnessing a pullback rally.”
He added that the recovery in the last two trading sessions added to optimism, hinting at a possible continuation of the pullback next week.
A major driver of this move was the Bank Nifty, which surged over 2%, forming a sizeable bullish candle on the weekly chart. According to Shah, the Bank Nifty to Nifty ratio climbed to a 30-session high, highlighting relative strength in the banking sector. Frontline banks such as Kotak Mahindra Bank, Axis Bank, and HDFC Bank played a key role in lifting investor
confidence.
The Nifty IT index, which had been undergoing a corrective phase, also stabilized, reducing downside pressure and supporting broader market recovery.
Key Levels to Watch for Nifty
Shah explained that the 25050–25,100 zone will act as a critical hurdle, corresponding to the 61.8% Fibonacci retracement level of the recent decline. A sustainable move above 25,100 could trigger a sharper pullback rally, potentially extending toward 25,400.
On the downside, the 24,600–24,550 support zone is vital. Breaching this range could invite renewed selling pressure, dampening recovery momentum.
Bank Nifty Leads Market Recovery
Shah emphasized the stellar performance of the banking sector: “Bank Nifty has delivered a stellar performance this week, decisively outperforming broader indices. The banking benchmark surged over 2%, closing above 55,500, marking its highest weekly close since the last week of July 2025.”
Frontline banks including Kotak Mahindra Bank, Axis Bank, and HDFC Bank drove the rally, helping lift sector sentiment. Technically, the daily RSI is on the verge of crossing the 60 level, signaling strengthening momentum.
Looking ahead, Shah expects Bank Nifty to continue its northward trajectory, testing 56,200 and then 57,000 in the short term.
Sensex Technical Outlook
Sensex staged a smart recovery after recent weakness, ending the week positively. On the daily chart, a Three Outside Up candlestick pattern indicates a bullish reversal, while reclaiming the 100-day EMA adds credibility to the ongoing pullback.
Momentum indicators are improving, with the daily RSI rising from 37.57 to 48.77, suggesting bulls are regaining control. Crucial levels to watch include resistance at 81,300–81,400 and potential upside targets of 82,100–82,600. Support is expected around 80,500–80,600.
Institutional Flows Impact Market Sentiment
Shah noted, “FIIs have been net sellers over recent months. In September 2025, FIIs withdrew about ₹35,301 crore from Indian equities, continuing a multi-month exit streak. However, DIIs have stepped in aggressively, with net inflows of ₹2,21,111 crore in the last three months, helping anchor the markets.”
He added that domestic flows driven by retail participation and policy support provide market resilience. However, external factors like interest rate changes, US dollar strength, and global trade tensions could limit upside unless foreign inflows return.
Sectors to Watch Next Week
Technically, Shah predicts Nifty Metal, PSU Banks, Private Banks, CPSE, PSE, and Financial Services will continue to outperform in the short term.
On the other hand, Nifty IT, Consumer Durables, FMCG, Pharma, Healthcare, and Realty are likely to underperform.
Stocks Under Focus
Investors should keep an eye on Kotak Bank, Bharat Electronics, BHEL, Canara Bank, Punjab National Bank, JSW Steel, Tata Steel, National Aluminium, Shyam Metalics, and Minda Corp, which are showing strong technical setups and could benefit from sectoral rallies.
Indian markets closed the week with positive momentum, led by a strong rebound in banking stocks and stabilisation in IT. Investors will closely watch the Nifty’s ability to cross the 25,100 resistance next week. Sustained domestic flows, coupled with sectoral strength, may fuel a short-term pullback rally, while external headwinds remain a key risk factor.
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