The Indian stock market experienced a period of range-bound activity last week, with key indices fluctuating as the Q4 earnings season drew to a close. While there were no major surprises from the earnings reports overall, LIC stood out with a positive breakout and strong guidance, potentially indicating momentum if it sustains above the ₹1,000 mark. Mid and small-cap stocks captured the spotlight, outperforming their larger counterparts. Market movements were also influenced by global cues and selective FII activity, creating a dynamic environment for investors.

According to equity strategist Kranthi Bathini of Wealthmills Securities, the overall Q4 earnings were considered decent, generally exceeding expectations and demonstrating year-on-year expansion. Despite lingering geopolitical uncertainties, India's adept handling of international tensions has reportedly reassured global investors. This has led to a noticeable trend where Foreign Institutional Investors (FIIs) are increasingly favoring India over other markets like the US, attracted by greater clarity and the perceived resilience of the Indian economy.

The domestic macroeconomic fundamentals remain robust, contributing to market stability. Factors such as cooling inflation, the early onset of monsoons, and a generally growth-supportive economic environment have helped markets maintain their position, even when some Q4 results were subdued. This underlying strength provides a buffer against external shocks and supports investor confidence.

Among various sectors, defence has emerged as a standout performer. Its strength is attributed to long-term fundamental drivers rather than solely short-term geopolitical tensions. While there might be some froth in defence stocks due to heightened investor interest, market analysts suggest that any price dips could present viable buying opportunities for those with a long-term perspective.

Banking and financial services continue to be key picks for investors, remaining favorites among FIIs and forming the core of India's growth narrative. The anticipation of potential rate cuts is expected to further bolster this sector. However, a recent corporate governance issue at IndusInd Bank serves as a critical reminder for the entire sector to uphold stringent governance standards. This incident highlights the importance of due diligence for investors in this space.

Non-Banking Financial Companies (NBFCs) are currently navigating short-term headwinds, largely due to new RBI norms. However, looking towards the medium term, NBFCs are expected to benefit from eventual rate cuts and sustained credit growth in the economy. This positions them for a potential recovery and growth phase once the immediate regulatory adjustments are absorbed.

Selective interest is also being observed in the Information Technology (IT) and infrastructure sectors. However, the outlook for IT remains somewhat uncertain, influenced by global demand and other evolving factors. Infrastructure, on the other hand, continues to be a focal point for long-term investment aligned with India's development goals.

For the current market phase, the recommended strategy for investors is to 'buy on dips and sell on rallies.' It is crucial for investors to utilize trailing stop losses to protect gains and to avoid being swept up in temporary market euphoria. Until the Nifty index decisively crosses the 26,000 mark, range-bound movement is likely to persist, underscoring the need for a cautious yet opportunistic approach.

Several key triggers are expected to influence market sentiment in the near term. The progress of the monsoon season is paramount, as it directly impacts agricultural output and broader economic activity. Globally, volatility in US policy, particularly concerning tariffs and interest rates, adds a layer of uncertainty. These external factors can significantly drive short-term market movements and are often challenging for retail investors to predict accurately.

Regarding key Nifty levels, technical analysts identify strong support at the 24,750 mark. If the Nifty can sustain its position above 25,000, it could signal positive momentum ahead. Conversely, a break below the 24,750 support level might lead to downside pressure. However, the market benefits from strong liquidity, contributed by FIIs, Domestic Institutional Investors (DIIs), and retail participants, which is likely to ensure pullbacks and present buying opportunities during dips.