Trade Setup for October 20: Key levels to watch after Nifty hits one-year high

Ahead of the festive week, Indian equities staged a strong rally, delivering their biggest weekly gain in four months. Last week started on a cautious note amid renewed US-China tariff tensions over the weekend, with the Nifty slipping to around 25,050 on Tuesday before bouncing back.

The Nifty 50 extended its winning streak for the third straight week, rising 124 points on Friday to close at 25,709 after touching a fresh 52-week high of 25,781 earlier in the session. For the week, both the Sensex and Nifty logged gains of nearly 2%.

On Friday, the index recovered swiftly from a weak opening and maintained its upward momentum through the session. Though minor profit-taking emerged near the 25,800 mark, sentiment remained firm, and the Nifty ended the day close to its highs.

Overall, market sentiment stayed buoyant as the index decisively broke out of a four-month consolidation phase. Large-cap stocks took the lead in the rally, while mid- and small-cap counters underperformed, a trend typical of the early stages of a bull market.

Broader indices underperformed the benchmarks, with the Nifty Midcap 100 slipping 0.57% and the Nifty Smallcap 100 edging lower by 0.05%.

Among the Nifty constituents, Asian Paints, Mahindra & Mahindra, and Bharti Airtel were the top gainers, while Wipro, Infosys, and ETERNAL came under selling pressure.

Sectorally, FMCG, Healthcare, Pharma, and Auto stocks saw strong buying interest, whereas IT, Media, and Metal sectors witnessed profit-booking and ended with the steepest losses.

Markets closed the week on a strong note, led by firm global cues, healthy domestic macro data, and optimism over Q2 earnings. The Nifty opened firm and stayed buoyant through the session, though some late profit-taking trimmed early gains.

Looking ahead, markets will react to earnings from index heavyweights, Reliance Industries announced results late on Friday, while HDFC Bank, ICICI Bank, UltraTech Cement, and others reported over the weekend.

With Diwali around the corner, this week will be a truncated yet sentimentally strong trading week.

According to Siddhartha Khemka of Motilal Oswal Financial Services, the market's upward momentum is likely to continue, supported by robust Q2 earnings, strong festive demand, optimism over a potential India-US trade deal, and renewed foreign investor buying.

Rupak De of LKP Securities said the Nifty looks strong for additional gains, citing that "buying on declines could prove rewarding." He pegged key support at 25,500 and resistance in the 25,850-26,000 range.

According to Nandish Shah of HDFC Securities, the index has moved past a crucial swing high of 25,669 recorded on June 30, 2025, a breakout that opens the door for a potential retest of the all-time high at 26,277. Shah added that near-term support lies around 25,450.

Echoing a similar view, Rajesh Bhosale of Angel One said the recent breakout indicates that the bulls are back in control. "The immediate upside target is around 26,000, followed by the all-time high near 26,277," he said.

While the broader chart pattern signals the possibility of much larger gains in the coming months, Bhosale advised traders to take it one milestone at a time and stay constructive on the market.

Nagaraj Shetti of HDFC Securities also expects the uptrend to extend further, identifying 26,200 as the next upside level to watch, with immediate support at 25,500.