Trade Setup for October 27: Nifty heads into earnings-heavy week amidst buyers exhaustion

The Nifty 50 had rallied 1,500 points in 15 trading sessions, from the September 30 low of 24,587, to last Thursday's high of 26,104. It was only par for the course that buyers exhaustion would emerge at higher levels, as it did starting Thursday afternoon. The index has already come off 300 points from last Thursday's intraday high.

Trading is likely to resume in full swing after the Diwali festivities last week, which resulted in a truncated week. The Nifty has a lot to react to when trading resumes on Monday, including results from Kotak Mahindra Bank, fund raising announcements from Ola Electric, a positive handover from Wall Street after a delayed inflation report, and other results that were reported after market hours on Friday.

The upcoming week is an dominated by earnings. More than 160 companies, including Nifty 50 and broader market names will be reporting results next week. All eyes will be on global factors as well. The US Federal Reserve meets this upcoming week to decide on what could be another rate cut, while US President Donald Trump and Chinese President Xi Jinping meet in South Korea on Thursday on the sidelines of the APAC summit. The other major factor that the market will react to is the trade deal signed between the US and Thailand.

Monday's session will see companies like Adani Energy Solutions, Bata, Chennai petro, Indus Towers, Indian Oil Corporation, JK Tyre, Kfin Tech, Mazagon Dock, PNB Housing, Sona BLW, Supreme Industries, Tata Investment, among others report results. There will also be result reactions for Coforge, Dr. Reddy's Eclerx, Latent View Analytics, and SBI Cards.

A major reason for the fall from higher levels on the Nifty has been the Nifty Bank. The index has declined nearly 900 points from the record high of 58,577 that it made last week. The index will continue to remain in focus as Kotak Bank will react to its results reported over the weekend. To know more about how India's top lenders fared during the quarter, click here.

Looking at key levels, the 57,900–58,000 zone will act as an immediate resistance for the Index. If the index manages to give a follow

through move above the level of 58,000, the pullback can continue further till 58,500 level. While, on the downside, the zone of 57,200-57,100 will act as a crucial support for the Index, Sudeep Shah of SBI Securities said.

The 25,700 - 25,800 zone will be an important level for the Nifty on the downside going into Monday's trading session, based on Friday's low of 25,718. On the upside, 25,850 will be the first level to watch, followed by the 25,900 - 25,950 congestion zone. 26,000 continues to be a major barrier for the index.

The overall near-term trend of Nifty remains positive but the market is facing selling pressure as per short-term basis, said Nagaraj Shetti of HDFC Securities. Further weakness from here could bring crucial support around 25,600-25,500 levels, which could be a buy on dips opportunity for the next week. Immediate resistance is placed at 25,950, he added.

Amol Athawale of Kotak Securities said that 25,700 - 25,550 are some of the key support levels for the Nifty on the downside, while 26,100 - 26,150 can be a key hurdles for the bulls. The sentiment though, could turn bearish if the index falls below 25,550 as bulls may want to exit from their longs.