Friday’s session (Sep 5) kept traders on the edge with a roller-coaster ride. The market opened strong on upbeat global cues – Nifty jumped about 84 points at the open to 24,818 and swiftly hit an early high of 24,832[1]. However, mid-session selling pressure kicked in (notably in IT and FMCG stocks), dragging Nifty down to an intraday low near 24,621[1]. A sharp recovery in the final hour – led by heavyweight Reliance Industries – pulled the index back to close virtually flat at 24,741 (up a mere +0.03%)[2]. Bank Nifty mirrored the choppy trend: it opened 233 points higher at 54,308 but slipped during the day to finish around 54,114 (up +0.07%)[3], indicating a similarly flat outcome.
Such a tug-of-war session saw sectoral winners and losers balancing out. Auto stocks revved up – the Nifty Auto index jumped +1.25%[4][5] after the GST Council’s tax cuts bolstered demand optimism. Metal and media stocks also notched modest gains (~+0.5%)[6]. In contrast, profit-taking hit defensives: Nifty FMCG and IT indices both fell around -1.4%[7], as IT heavyweights like TCS and HCL Tech slumped on global growth worries. Among Nifty’s heavyweights, auto majors Eicher Motors (+2.4%) and M&M (+2.3%) zoomed to the top of the gainers list[8]. Dr. Reddy’s, Maruti, and Power Grid also provided upside support[6]. On the flip side, ITC (-2.1%) and HCL Tech (-1.7%) were major drags, and even tech titan TCS slipped nearly 1%[6]. Despite the volatility, the broader market was steady – midcap and smallcap indices ended flat-to-positive, showing continued investor appetite beyond blue-chips. In summary, short-term momentum has shifted to a consolidation mode after this week’s bounce. Notably, Nifty and Sensex still managed to gain over +1% for the week[9], recouping most of the prior week’s losses, which suggests the medium-term trend remains cautiously bullish (higher highs over recent weeks) even as the index pauses near its all-time highs.
The charts reveal a market at crossroads. Nifty’s daily chart formed a candle with a long shadow – reflecting the intraday reversal. Importantly, the index is trading above its 21-day moving average (~24,700), a short-term positive sign, but it continues to face a ceiling near the 50-day MA around 24,980, which coincides with the upper edge of a symmetrical triangle pattern on the chart[10]. This triangle has been coiling for weeks; a decisive break above 25,000 would mark an upside breakout and could open the gates for a rally towards 25,300 and even 25,500[11]. On the downside, Nifty’s immediate support is at 24,620 (Friday’s low), with a stronger support around 24,500 (the recent swing low)[12]. Notably, 24,520 was mentioned as a key level by analysts[13] – a breach below that may tilt momentum bearish in the short run.
For Bank Nifty, the index is showing relative consolidation. It faces an immediate hurdle around 54,500–54,600 (supply zone from last week)[14]. Meanwhile, strong support lies at 53,600–53,500, which interestingly aligns with its 200-day EMA – a critical long-term indicator[14]. This suggests Bank Nifty is near a make-or-break point: holding above the 200-day average keeps its broader uptrend intact, but slipping below could invite bearish pressure. Chart-wise, Bank Nifty’s daily candle had a long lower wick, reflecting buyers defending lower levels. It remains in a lateral range roughly between 53,500 and 54,600; a clear break of this range may lead to a trending move as volatility contracts.
Momentum indicators are sending neutral-to-mixed signals. The daily RSI for Nifty sits just below the mid-50s (around 49) – neither overbought nor oversold[15], echoing the range-bound price action. We’re not seeing any strong bullish or bearish divergence on the RSI at this point, as recent highs and lows in price are fairly in sync with momentum. The MACD is flatlining near the zero line, with the signal line converging – a sign of the ongoing equilibrium. Until a breakout occurs, these oscillators are likely to whipsaw around neutral levels. Volume patterns likewise show no alarming divergences: Friday’s turnover was moderate, and volumes spiked during the midday sell-off and again in the late rebound, indicating active participation by both bears and bulls at key junctures. In summary, the technical picture for tomorrow hinges on that tight range – traders should watch for either a push above 24,840–24,900 resistance or a slip below 24,620–24,500 support for clues to the next directional move[12]. Until then, expect the index to continue coiling, with savvy eyes on that symmetrical triangle apex drawing closer.
While technicals paint one side of the story, the fundamental backdrop adds important context. On the domestic front, the tail-end of earnings season didn’t throw any big surprises – most heavyweight companies have reported, so stock-specific action was driven more by news than results. A key positive driver on Friday was the outcome of the GST Council meeting: the council announced GST rate cuts in the auto sector, which lifted sentiment for auto manufacturers. Investors interpreted this as a demand catalyst, evidenced by the auto index’s strong performance[16]. Consumer-facing sectors in general (Auto, select FMCG names) got a boost from hopes that lower taxes and festive season ahead will spur spending[17]. On the policy front, there were no major domestic economic data releases on Friday, and none are slated for Monday’s open – giving the market some breathing room to trade on global cues and technicals. However, traders will be keeping an eye on India’s upcoming inflation and industrial production data due later in the week (which could influence RBI’s stance), though those are not immediate for Monday.
Global cues have turned supportive in a big way. U.S. markets rallied on Friday with major indices setting fresh record highs[18], fueled by increasing bets that the Federal Reserve will pivot to rate cuts soon. The reason? A much weaker-than-expected U.S. jobs report for August. The U.S. added only 22,000 jobs last month – a stark slowdown – and the unemployment rate jumped to a near 4-year high of 4.3%[19]. This clear sign of a cooling labor market “sealed the case” for a Fed rate cut in the coming weeks[20]. In simple terms, bad news on the economy became good news for markets, as investors cheered the prospect of easier monetary policy. Asian markets are likely to react positively to the Fed outlook; on Friday, key Asian indices were already trading higher anticipating the soft U.S. jobs data[21]. We should note, however, that a deteriorating U.S. economy isn’t all rosy – recession fears are creeping in alongside rate cut hopes. This dynamic will be in play on Monday as traders digest the full implications over the weekend.
Other global factors: Crude oil prices have been trending down over the past week. Brent crude saw its third straight daily decline on Friday[22], heading for its first weekly loss in three weeks. Rising expectations of higher oil supply (perhaps due to OPEC decisions or inventory builds) and a surprise jump in U.S. crude inventories pushed oil to around 3-week lows[22]. This is actually a silver lining for India – as a net oil importer, falling crude prices ease inflation and improve the trade balance, which could bolster domestic sentiment. In the currency space, the Indian rupee weakened to ₹88.26 per US dollar (down 11 paise) on Friday[23][24], hitting fresh all-time lows against the dollar. This was partly due to persistent FII outflows and some renewed trade worries – specifically, U.S. tariff threats. Traders took note of comments from U.S. President Trump hinting at potential tariffs targeting Indian IT services, which weighed on IT sector sentiment and contributed to rupee weakness[24]. Geopolitical news (like the ongoing global trade negotiations and any war-related updates) remain a background risk, but nothing spiked on Friday beyond these trade tariff musings. We’ll also keep an eye on the European Central Bank’s rate decision coming later in the week[25] – while not Monday’s concern, any signals from the ECB on inflation or stimulus could flow through global markets.
In summary, fundamental drivers for Monday are a mix of positive and cautionary. On the positive side, we have supportive global cues (Fed rate-cut hopes, strong U.S. market close, lower oil prices, encouraging domestic policy tweaks like GST cuts). On the cautionary side, we have lingering concerns: the rupee’s weakness (sign of persistent FII selling and external pressures), tariff/trade issues that could flare up, and the fact that a weaker U.S. economy could cap global risk appetite despite Fed optimism. With no major domestic data due at the open, the market’s direction will likely hinge on how global markets behave Monday morning and any weekend news developments. As always, corporate news (like any late-breaking earnings or stock-specific announcements) will be on the radar, but at this juncture, index direction seems tied more to macro currents than micro news
Market sentiment going into the new week is a blend of cautious optimism and undercurrents of anxiety. Let’s break down how each class of market participant is positioned and feeling after Friday’s session:
Retail Traders / Clients: The retail crowd has been relatively bullish, riding the momentum in midcaps and smallcaps even as large indices stalled. Data on participant open interest shows that client accounts (mostly retail and HNI traders) are net long in the derivatives market – holding roughly 9.8 million long contracts vs 7.7 million short across index and stock futures/options. This sizable long bias suggests that individual traders are positioning for more upside, perhaps encouraged by the market’s resilience and the “buy on dips” success in recent weeks. Emotionally, retailers might be a bit conflicted: excitement from quick gains in certain stocks versus frustration that Nifty isn’t breaking out yet. The volatile flat close on Friday likely left many retail intraday traders breakeven or only slightly profitable, which could temper overconfidence. Overall, the retail sentiment seems guardedly optimistic – many will look for buying opportunities if the market shows strength on Monday, but there’s also a sense of caution (nobody wants to be caught on the wrong side of a sudden breakdown).
Domestic Institutions (DIIs): Domestic institutional investors (like mutual funds, insurance companies) continue to be the backbone of support for the market. On Friday, DIIs net bought ₹1,821 crore of equities even as the market went nowhere[26]. This significant infusion shows that local institutions are still finding value on dips and are confident in India’s fundamentals. However, DIIs also appear to be hedging their bets. The participant open interest data reveals DIIs held about 4.36 million short contracts vs only 0.30 million long in derivatives on Friday – a stark net short position. This is a classic hedging strategy: DIIs are buying stocks for the long term (supporting the market), but simultaneously shorting index futures or buying puts as insurance against near-term downside. It reflects a prudent stance – accumulate quality stocks, but protect against volatility. Sentiment-wise, DIIs likely remain positive on India’s growth story (hence their continued buying), yet they are very mindful of global risks and elevated valuations, explaining the hedge.
Foreign Institutional Investors (FIIs): FIIs have been the bears of 2025 so far, consistently selling Indian equities for months. Friday was no different – FIIs net sold ₹1,305 crore in the cash market[26], extending a brutal outflow trend (over ₹2.15 lakh crore sold in 2025 to date!). This selling has been a major overhang on sentiment. However, there’s a nuanced shift: in the derivatives market, FIIs actually hold more long contracts than shorts (4.68 million vs 3.29 million on Friday). Moreover, on the index futures side, data from the F&O segment (as indicated by some brokerage statistics) suggests FIIs might have covered some shorts or even gone slightly long index futures after the weak U.S. data. This could imply that FIIs are hedging their equity selling or positioning for a relief rally ahead – essentially, they’re cautious but not outright bearish at index levels. Their behavior seems to be: sell stocks where they see risk or high valuation, but simultaneously be prepared if the market turns up (so as not to miss out). Market sentiment among FIIs likely remains wary – they are concerned about global liquidity, high U.S. yields, and maybe reallocating funds to other markets – but the extreme pessimism might be easing if they believe a Fed rate cut will bring back some risk appetite. In short, FIIs are still net sellers (a negative for sentiment), but their derivative positioning hints at a bit less conviction in further downside.
Proprietary Traders (Prop Desk) & Market Makers: Prop traders (brokers’ own trading desks) and market makers are often the smart money providing liquidity. On Friday, they were extremely active – proprietary accounts contributed the lion’s share of derivative volumes, trading over 78 million contracts on both the long and short side. By day’s end, prop traders were nearly market-neutral with a slight long bias (total longs exceeded shorts by a small margin). This suggests that market makers were aggressively balancing the order flow: stepping in to take the other side of trades during the mid-day sell-off and then possibly unwinding in the rally, which kept their exposure small. The high volume and quick flips are a hallmark of liquidity providers and intraday speculators scalping profits from volatility. Market makers’ behavior – providing almost equal longs and shorts – indicates a lack of a strong directional view; they are content earning the bid-ask spread and facilitating trades. For the market, this is reassuring because it means even in swings, there’s ample liquidity. If anything, the slight long bias of prop desks at close hints that they don’t mind holding a bit of overnight risk to the upside – perhaps expecting that the market won’t collapse and could drift higher next session.
Speculators / High-frequency Traders: Friday’s see-saw would have been a playground for nimble speculators. Intraday traders likely capitalized on the volatility: early in the day, shorting the index after the gap-up when it failed to push higher, then flipping long near the lows when signs of a bounce emerged. The multiple swings (morning rise, mid-day drop, afternoon rise) offered opportunities for those quick on the trigger. However, such swings also carry trap potential – late short-sellers in the afternoon got squeezed by the sudden recovery. By the close, many speculative intraday positions were probably squared off (as suggested by the balanced positions of pros). Sentiment among speculators is probably upbeat going into Monday – volatility is opportunity, after all. The key for them is that the market remains within a range (which it did), allowing mean-reversion trades to work. If the index continues to churn between support and resistance, short-term traders will enjoy scalping profits. They will be closely watching the order book and option Greeks on Monday for any signs of a breakout, ready to pounce on momentum or fade head-fakes. In essence, speculators are energized but not married to any bias – they’ll follow whichever direction Monday brings, armed with tight stop losses.
In summary, overall market sentiment is cautiously positive among domestic players (retail and DII), while FIIs remain a drag with their selling. The participant behavior data shows an interesting dynamic: domestic players (retail + DII + prop) have largely picked up the slack of FII selling, preventing a deeper correction. This tug-of-war could continue. If FIIs keep selling, it will test the resolve of domestic bulls; conversely, any slowdown in FII outflows or hint of FII buying can really boost confidence. For now, the mood for tomorrow is one of “hopeful watchfulness” – hope that the global tailwinds (Fed dovish turn, etc.) might finally spark a breakout, but watchfulness because the market has been fickle and filled with false starts lately. Expect emotions to be closely tied to the first hour of trade on Monday: a strong opening could breed FOMO (fear of missing out) among sidelined bulls, while a weak start could raise anxiety and spur protective trades. It’s a delicate balance, but one thing is clear: all participants are actively positioning (or hedging) for a big move ahead – the stage is set, just awaiting a trigger.
Given the mixed backdrop, it’s prudent to consider multiple scenarios for Monday’s trading (Sep 8) and assign probabilities to each. Here are the three possible scenarios for Nifty (and Bank Nifty), along with their catalysts and pitfalls:
Bullish Case (40% Probability): The market builds on Friday’s late recovery and positive global cues, leading to a gap-up or strong morning rally. Nifty pushes above the 24,840 resistance and quickly takes out the psychological 25,000 mark – confirming a breakout from its consolidation range[12][10]. This could trigger short-covering and fresh buying, propelling the index toward 25,300 in the coming sessions (a target from the triangle pattern breakout)[11]. Bank Nifty would likely reclaim 54,500 and head for the upper 55,000s. Heavyweight stocks (Reliance, HDFC Bank, Infosys, etc.) would need to participate for this rally to sustain. Key bullish catalysts include a soft U.S. jobs report translating into a global risk-on rally (already seen in U.S. markets), continued DII buying, and possibly a pause in FII selling if they perceive less downside. Why it might fail: Even if we get an intraday breakout, the bullish case could be capped by weak global news flow or profit-booking near 25,000. For instance, if over the weekend there’s any negative development (e.g., a hawkish Fed comment despite weak data, or worsening China growth news), the optimism could fade quickly. Also, after a 1% weekly gain, some traders might use strength to book profits. In short, the bullish scenario looks plausible given the setup, but a failure to sustain above 25,000 or thin buying breadth would undermine this case, pulling Nifty back into its range.
Bearish Case (20% Probability): The market resumes the downside seen mid-session Friday, unable to hold support. In this scenario, Nifty might open flat or slightly down and then slide, breaching the 24,620 immediate support and the 24,500 level decisively[12]. Such a break could trigger stop-losses and a quick drop toward 24,300–24,200 (the next demand zone and roughly the 50-day low area). Bank Nifty in this case would lose 53,500 support (its 200-day EMA) and potentially test 53,000 or lower. Bearish catalysts could be a sudden risk-off in global markets – for example, if European markets react poorly to some news on Monday, or if U.S. futures slide (perhaps due to weekend geopolitical events or a realization that a weakening economy is bad for earnings). Another trigger could be renewed FII selling pressure – if they accelerate outflows on Monday, sentiment could sour quickly. Additionally, the rupee hitting record lows might raise concern of imported inflation, spooking equities. Why it might fail: The downside is cushioned by strong domestic hands – as we’ve seen, DIIs are eager to buy dips and retail sentiment is still positive. Any sharp fall would likely invite value buying around those support levels. Also, global cues would have to significantly worsen to truly break the camel’s back here. Absent a new negative shock, the market has shown an ability to recover from intraday lows (like it did Friday). Thus, the bearish case requires a confluence of negatives and could easily fizzle if, say, crude oil continues to fall or if FIIs unexpectedly slow their selling. In essence, the bears may lack follow-through unless a key support gives way on high volume – if that doesn’t happen, this scenario will be short-lived.
Neutral Case (40% Probability): The market continues to consolidate in a range, essentially repeating the kind of choppy session we saw on Friday but perhaps with a narrower band. In this scenario, Nifty might oscillate roughly between 24,500 and 24,900 without a decisive breakout in either direction – reflecting a “wait and watch” approach. This aligns with the view of many analysts that the index could spend more time within the 24,400–25,000 zone to digest recent gains[13]. We could see intraday volatility (small spurts up or down on news flashes or data like the domestic PMI, etc.), but by the close, Nifty would be near unchanged, forming yet another indecisive candle. Bank Nifty would likewise hover between 53,500 support and 54,500 resistance. Catalysts for neutrality include a lack of major news triggers on Monday and mixed global markets (for instance, if Asian markets are flat and European stocks also trade listless awaiting the ECB meeting). Additionally, after Friday’s doji-like finish, the market may simply be in a holding pattern until a clearer signal (such as the U.S. inflation data or the Fed meeting later in the month). Options data indicates heavy open interest build-up at strikes around 24,800 and 24,500, pointing to expectations of a range-bound session as well. Why it might fail: The neutral case assumes no new dominant drivers, but it could be invalidated by an unexpected development. For example, if the actual Fed commentary or domestic policy news hits the wires intraday, it could jolt the index out of its range. Also, prolonged consolidation has a way of resolving sharply – so even though we assign a high chance to neutrality, the market won’t stay directionless forever. Traders bracing for calm should still be ready for a sudden storm if one of the other two scenarios starts to play out by afternoon.
Conclusion: Balancing these scenarios, the most likely base case for Monday is a mildly positive but range-bound market. The bullish factors (Fed tailwind, domestic buying support) give a slight edge that Nifty will attempt an upward bias – perhaps testing the 24,900-25,000 zone again – but unless there’s a strong external push, it may not sustain a big move beyond the range. The neutral scenario of consolidation has an equally high probability, meaning we might just see an inside day where neither bulls nor bears make a decisive stand. The outright bearish breakdown appears less likely given current information, but it’s not off the table if new negatives emerge. Traders should be prepared for all three possibilities – plan your trades with if/then contingencies (e.g., “If Nifty breaks 24,900, then… if it falls below 24,500, then…”) to stay ahead of whichever script the market follows. In any case, expect an interesting session as the index coils tighter; a larger directional move is brewing in the coming days, even if it doesn’t fully materialize on Monday.
Pre-Market Prep: As we head into Monday’s session, it’s crucial to do a quick global scan before our market opens. Check the Friday closing figures for the Dow, S&P 500, and NASDAQ – they were strong last we saw, which bodes well. Early Monday, look at Asian market opens (Nikkei, Hang Seng, etc.) to gauge regional sentiment. Also keep an eye on the Gift Nifty (SGX Nifty) futures quote around 8:00 AM IST – it’s a good indicator of the likely gap at our open. As of now, Gift Nifty was hovering around 24,825 (just slightly below our closing level) in the overnight session[27][28], suggesting a flat to marginally negative start, but this can change with new inputs by morning. No major economic data is scheduled domestically before market hours, but do glance at any news from the weekend – e.g., any government policy announcements, Covid-related updates (if any), geopolitical news, or corporate developments (like results or management commentary from the weekend). With the U.S. jobs report behind us, the next big global data to watch will be U.S. inflation (CPI) later in the week and the ECB meeting – not Monday events, but keep them on your radar for the trend ahead.
Trading Levels & Game Plan: Mark out the key levels on your index charts: for Nifty, supports at 24,620 and 24,500, resistances at 24,840 and 24,900-25,000. For Bank Nifty, supports around 53,600 and 53,300, resistance around 54,600. These are inflection points – if Nifty sustains above 24,840, it’s a cue that bulls are gaining ground and you can look for long opportunities in leading sectors (auto, metal, banking). If instead Nifty slips under 24,620, prepare for a test of 24,500; a breach there could warrant considering hedges or quick short plays on weak sectors (IT, possibly). Intraday triggers to watch include the first hour’s high and low – they often set the day’s range. If we break above the first hour’s high in the afternoon, it usually signals an upward trend day; vice versa for breaking below the first hour’s low. Also, track FII-DII flow cues around 3 PM (if data leaks out) – heavy FII selling might show up in a weakening last hour, whereas if the market is stable, it hints that domestic buying is absorbing supply. Another trigger is options OI changes – e.g., if you see a lot of 25,000 call writing being covered (unwound) midday, it means traders expect an up-move. Similarly, if 24,500 put writers start bailing, caution on downside. Basically, stay alert to shifts in the narrative through the day: is volume increasing on up-moves or down-moves? Are defensive stocks suddenly catching a bid (sign of risk-off) or are high-beta stocks flying (risk-on)?
Pro Tips: It’s the start of the week, so don’t rush in with huge positions at the open. Let the market reveal its hand in the first 15-30 minutes. There might be head-fake moves as the overnight orders get settled. Have a prepared checklist: (1) Identify 2-3 strong stocks and 2-3 weak stocks from Friday’s trade – if the market trends, those could be leaders/laggards to play (for example, if bullish, look at autos like M&M or banks; if bearish, maybe IT stocks or overbought midcaps for shorts). (2) Set alerts on your trading platform for the Nifty/BankNifty key levels so you’re notified if they break. (3) Review your positions from last week – if you’re holding any, decide exit levels in advance (don’t let a trade turn into an investment!). Also, given the recent volatility, consider position sizing carefully – it’s okay to go slightly smaller until a clear trend emerges, then add on confirmation.
Finally, a dose of perspective and reassurance. It’s easy to get caught up in every zigzag of the index, but remember that this is all part of the market’s rhythm. We’ve analyzed the landscape thoroughly – now it’s about executing according to plan and adapting as needed. If you’ve done your homework (which you have by reading this outlook!), you can approach Monday with confidence rather than fear. And if the market does something completely unexpected? That’s okay too – step back, observe, and learn from it. There’s no need to panic or stay up all night second-guessing. As we like to remind every trader at the end of the day: The market will always create opportunities tomorrow — no need to stay up in suspense. Just get a good night’s rest, come back fresh, and be ready to seize the opportunities that arise. Happy trading![1][6]
Sources
[1] [3] [22] POST-MARKET SUMMARY 5TH September 2025
[2] [6] [8] [9] [10] [11] [12] [13] [14] [15] [21] [23] [24] Closing Bell: Sensex, Nifty flat amid volatility; FMCG, IT drag, auto, metals shine | Moneycontrol News
[4] [5] [7] [27] [28] NSE – National Stock Exchange of India Ltd: Live Share/Stock Market News & Updates, Quotes- Nseindia.com
[16] [17] [18] [25] [26] FIIs net sell shares worth Rs 1305 crore, DIIs net buy Rs 1821 crore on September 5
[19] [20] US unemployment rate near 4-year high as labor market hits stall speed | Reuters