Dalal Street Week Ahead: All eyes on Budget 2026 as Nifty settles at key levels

Over the past week, markets have traded within a range while maintaining a positive bias. After seeing some volatility early this week, the Nifty fluctuated between 24,932 and 25,458 before settling for modest gains. India’s VIX fell 3.95% to 13.63, indicating easing volatility ahead of the event. Overall, the Nifty ended the week with a gain of 272 points or 1.09%. An important domestic event, the Union Budget, is scheduled for Sunday. Markets have a full session on Sunday. Nifty continues to trade within a broad consolidation zone and has managed to defend its 50-week MA (24,806). The Index has also defended the 200-day MA (25,199) after falling below it over the past week.

The Index is also seen gaining support near the downward trendline and has closed slightly above this critical zone. The markets are currently not in a trend phase, and a decisive break above 25,400 or below 24,900 would be needed to make a directional move. The trend remains vulnerable to the risk of budget announcements, which could lead to a breakout or collapse depending on the proposals. Given the critical event on Sunday (Union Budget), markets may start the week flat or slightly cautious. Historically, such special sessions start in a bandwidth-constrained manner until after 11am, after which sharp volatility typically occurs. For the coming week, immediate resistance is placed at the 25,500 and 25,700 levels, while support exists at 24,900 and 24,750.

The weekly RSI stands at 48.35 and remains neutral, showing no deviations or extreme conditions. The weekly MACD remains below its signal line and maintains a negative crossover. There is no significant candlestick formation this week; the recent candle has a small body and reflects indecision and range-bound action.

From a pattern point of view, Nifty remains within a major ascending channel. The descending trendline point is between the 20-week MA and the lower Bollinger Band, making 24,750–24,800 a crucial support area. The Index is currently caught between the 20 and 50 week moving averages (24,748 and 24,806), and the inability to break either side could extend the ongoing consolidation.

Given the significant risk of events, traders and investors would be wise to remain cautious in the first part of the week. A stock-specific approach is recommended over aggressive index positioning. It would be wise to protect profits and avoid leverage ahead of budget outcomes. It would be wise to wait for clarity on the post-Budget direction before making any decisive decisions. The best approach for the week ahead would be to remain vigilant, protect profits and respond with measured risk to outbreaks or disruptions in the current zone.

In our look at Relative Rotation Graphs®, we compared several sectors to the CNX500 (NIFTY 500 Index), which represents more than 95% of the free-float market capitalization of all listed stocks.

Relative Rotation Charts (RRG) show the Nifty IT Index, Financial Services, Midcap100, Metal, PSUBank, Banknifty and Services Sector Indices which are in the leading quadrant. Although indices such as Services and Midcap 100 are losing relative momentum, this group is likely to easily outperform the broader markets in relative terms. The Auto Index and the Infrastructure Index are in the weakening quadrant. While there is stock-specific performance, the indices of these two sectors may be slowing their relative performance.

The FMCG and Realty Index continue to languish in the lagging quadrant. These groups may perform relatively worse than the broader Nifty 500 Index. The Energy Index is also in this quadrant; however, relative momentum is improving sharply. The Media Index has entered the improving quadrant. In addition, the PSE Sector Index is also in the improving quadrant; these groups can relatively improve their relative performance against the broader markets.