Indian equity markets snapped a three-day winning streak on Friday as the Nifty 50 closed at 25,144.30. Despite this fall, experts suggest the broader trend remains positive. Analysts said, "investors could consider buying on dips, provided important support levels remain intact." Rising retail inflation to 6.09% triggered this recent profit-booking.

Indian equity markets may have snapped their three-day winning streak on Friday, but the broader technical outlook remains constructive, according to market experts. With the Nifty 50 holding above the crucial 25,000 mark and key moving averages, analysts believe investors could consider buying on dips, provided important support levels remain intact.

The Sensex declined 318.56 points, or 0.39%, to settle at 81,592.45 on Friday. It fell as much as 622.26 points, or 0.75%, to an intraday low of 81,288.75. The Nifty 50 closed 155.05 points, or 0.61%, lower at 25,144.30. The decline snapped a three-session rally and marked the first major fall for both benchmark indices this month.

The sell-off followed the release of October retail inflation data, which showed consumer price inflation rising to 6.09% from 5.54% in September, breaching the Reserve Bank of India's upper tolerance threshold of 6%. The reading revived concerns about a potentially tighter monetary policy stance and a possible rate hike at the RBI's December meeting.

Why did the market rally lose steam?

Dr Ravi Singh, Chief Research Officer at Master Capital Services, said Indian equity benchmarks extended their gains for a third consecutive week, despite a holiday-truncated trading schedule and profit-booking towards the end of the week.

The Nifty 50 gained 0.63% during the week, while the Sensex advanced 0.73%. Singh attributed the broader recovery to sustained foreign capital inflows, driven by global portfolio reallocations from expensive developed-market AI trades towards emerging markets such as India. Festive optimism and strong credit growth data also supported sentiment earlier in the week.

However, Friday's gains came under pressure after October retail inflation climbed to 6.09%, crossing the RBI's upper tolerance band for the first time in two years. Elevated Brent crude prices near $98 per barrel and rupee weakness around 94.23 against the US dollar further encouraged investors to book profits, Singh said.

Nifty 50 outlook: Key support and resistance levels to watch

Despite Friday's decline, technical indicators suggest that the broader trend remains positive, according to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

Shah said the Nifty 50's 20-day exponential moving average (EMA) remains above its 50-, 100- and 200-day EMAs, with all four moving averages trending higher. This reinforces the underlying bullish structure.

On the upside, the recent swing high of 25,424 is the immediate resistance to watch. A decisive breakout above this level could confirm renewed bullish momentum and open the door to further gains. However, failure to cross this hurdle could keep the index in a consolidation phase.

On the downside, Shah identified the 24,900–24,850 range as an important support zone. A decisive break below 24,850 could intensify selling pressure and drag the index towards 24,600.

Hitesh Tailor, Research Analyst at Choice Broking, also highlighted the importance of the 24,900–24,850 support band. He said a sustained breach below 24,850 could expose the Nifty 50 to further downside towards 24,600. On the upside, a sustained move above 25,424 would signal renewed buying interest and strengthen the prospects of the prevailing uptrend.

Is buy-on-dips still the right strategy?

Dr Ravi Singh of Master Capital Services said the Nifty 50 continues to trade above its breakout zone, the 21-day and 55-day EMAs, and the psychologically important 25,000 mark. The index is also forming higher highs and higher lows, indicating that bullish momentum remains intact.

According to Singh, the crucial support to monitor is 24,750. As long as the index holds above this level, the broader technical outlook remains positive.

He believes a buy-on-dips strategy remains favourable, with upside targets at 25,500 and 25,850. Any intermittent profit-booking or correction towards support levels could offer buying opportunities, provided the broader market structure remains intact.