India equities gain 1% as falling volatility fuels banking rally
A drop in India's volatility index and broad banking strength pushed benchmark indices above key technical levels, setting the stage for a test of higher resistance zones.
Indian equities posted strong gains for a second consecutive session on Friday, driven by broad buying interest and favorable global signals. The Sensex climbed 1.08% to close at 77,569.39, while the Nifty 50 advanced 1.02% to settle at 24,206.90. Broader market indices outperformed the benchmarks throughout the session.
The rally was underpinned by a notable decline in market anxiety. The India VIX fell 8.31% to 12.25, a level that typically encourages fresh institutional positioning. Sumeet Bagadia, Executive Director at Choice Broking, noted that the drop in volatility reflects improving investor confidence alongside a moderately bullish derivatives market, where the put-call ratio stands at 1.14.
The Nifty 50 now faces a critical technical test at higher resistance levels. “The RSI has improved to 55.80, indicating strengthening momentum and a positive bias,” Bagadia said. “Significant Call Open Interest was concentrated at the 24,200 and 24,300 strikes, while notable Put Open Interest was seen at the 24,200 and 24,000 strikes. The 24,200 strike remained the dominant Max Pain level throughout the session, indicating a strong equilibrium zone for the near term.” A decisive move above the 24,450–24,500 zone is required to extend the current uptrend.
The banking sector acted as the primary catalyst for the day's advance. The Bank Nifty surged 1.39% to 58,045.90, supported by a more than 3% jump in state-owned lenders and steady contributions from private banks. The index successfully held above its previous swing-high breakout zone, which now aligns with its 50-day and 200-day exponential moving averages to form a strong technical floor.
Sustaining this momentum will depend on the banking index holding its current support base. “As long as Bank Nifty sustains above the 57,300–57,450 support zone, the overall bias is expected to remain positive. A sustained breakout above 58,700 could pave the way for further upside in the coming sessions,” Bagadia added.
The broadening risk appetite is also evident in individual stock action. Bagadia identified five stocks—Rajratan Global Wire, Jindal Poly Films, Datamatics Global Services, Chennai Petroleum Corporation, and Godrej Properties—exhibiting breakout patterns for Monday's session. Spanning industrials, technology, energy, and real estate, the selections suggest the recovery is not confined to frontline banking stocks but reflects a broader reduction in risk aversion across the Indian market.
