The Nifty 50 snapped its five-session losing streak on Monday, gaining 228 points to close at 23,995 after opening with a 161-point gap-up and extending gains throughout the session. The benchmark ended near the day's high, indicating renewed buying interest, but mixed global cues and the monthly F&O expiry are likely to keep traders cautious on Tuesday.
Adding to the cautious mood, GIFT Nifty was trading 0.31% lower at 23,968 as of 9:00 p.m., signalling a subdued start for domestic equities.
Global sentiment also turned mixed after reports of an Iraqi militia launching a drone attack on Saudi facilities, even as the US and Iran agreed to pause hostilities to give diplomatic talks a chance. US President Donald Trump, however, struck a cautious tone, telling Axios, "Either talks go fast or not at all."
Analysts expect volatility to remain elevated due to the monthly derivatives expiry.
"Volatility is likely to be high in tomorrow's session on account of the monthly F&O expiry. Sustaining above Monday's gap area (23,823-23,891) will keep the pullback trend intact and will open upside towards 24,100 and 24,170 levels in the coming sessions," Bajaj Broking said.
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Shrikant Chouhan, Head of Equity Research at Kotak Securities, believes the recovery can continue as long as Nifty remains above 23,880.
"We believe that as long as the market is trading above 23,880, the pullback formation is likely to continue. On the higher side, it could retest the 20-day Simple Moving Average or 24,100-24,150. On the flip side, below 23,880, the selling pressure is likely to accelerate. If it falls below this level, the market could slip to 23,800-23,725," he said.
Meanwhile, Nandish Shah, Deputy Vice President at HDFC Securities, said a decisive close above 24,200 would be needed to strengthen bullish momentum.
Bank Nifty Outlook
Bank Nifty remained range-bound in Monday's session, reflecting the absence of strong directional momentum despite the broader market's recovery. According to SBI Securities, the index continues to consolidate within a defined range, with technical indicators suggesting that traders should watch key support and resistance levels closely.
"Going forward, the 57,500-57,600 zone is likely to act as an important hurdle for the index. A decisive move above 57,600 could trigger a fresh round of buying interest, potentially pushing the index towards the 58,200 level," Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities added.
On the downside, Shah identified the 100-day Exponential Moving Average (EMA) as a critical support area.
"The 100-day EMA zone of 56,700-56,600 will serve as a crucial support area," he said.
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