The Indian stock market is swinging between gains and losses, keeping investors on tenterhooks. After hitting a 52-week high of 26,246.65 on Thursday, November 20, the market benchmark Nifty 50 has hit a downward spiral again, falling nearly 1% in two sessions.

On Monday, November 24, the index closed 0.42 per cent lower at 25,959.50, denting hopes that it will soon conquer its all-time high of 26,277.35, scaled on September 27 last year.

The level of 26,000 remains a key level for the index despite the presence of several tailwinds- such as improved outlook for earnings growth, valuation comfort in large-caps, and hopes of an India-US trade deal.

Why is the Nifty 50 not able to sustain 26k?

Domestic market sentiment has improved after a stable Q2 earnings. The Nifty 50 has gained over 6% since September. However, the index is not witnessing any strong, decisive uptrend because of persisting uncertainty over a potential India-US trade deal.

“We are doing better than global markets, but the strong momentum needed for a prolonged rally is missing. The key trigger could be the India–US trade deal. It is crucial from a trade and regulatory standpoint, and it could significantly boost sentiment in mid-cap and small-cap stocks. Since clarity on the trade deal is still pending, the market is waiting for that catalyst,” said Pankaj Pandey, the head of research at ICICI Securities.

“There is potential for a decent move post-announcement. However, the timing of the deal is uncertain. We have been speculating for long enough — so it’s best not to predict the timing,” said Pandey.

Pandey has a 12-month target of 29,500 for the Nifty 50. This target implies reaching 29,500 by calendar year 2026.

The 26,000 mark should also be viewed from a different perspective. It’s not about sustaining 26,000 specifically. The broader trend right now is not a decisive or strong uptrend. The market is moving in a very gradual, grinding manner.

Ajit Mishra, SVP of Research at Religare Broking, pointed out that since August, from the lows of around 24,300, every recovery has been followed by a 50% or even deeper retracement. Recently, the market bounced from around 25,490 on October 10 and rallied towards 26,000.

Mishra believes if the index fails to hold 25,800 – which is the first support near the 20-EMA – it could retrace further to around 25,600.

Another factor is that key triggers, such as a possible India-US trade deal, improved earnings, and valuation comfort in large-caps, are already known and mostly priced in.

“If the market were responding purely to fundamentals, it should have rallied earlier.

The missing factor is strong foreign institutional investor (FII) buying. Domestic institutional investors (DIIs) are consistently buying, but FIIs remain cautious,” Mishra observed.

“Globally, AI-driven enthusiasm is driving flows, but that momentum hasn’t come into India yet. If FII buying sustains for at least a week or two, we may see stronger upward momentum,” said Mishra.

At this juncture, the market appears to be slightly cautious. Earnings growth this quarter looks better, but it is partly driven by a low base.

If there’s any margin pressure ahead, the outlook for a strong earnings cycle could weaken. So, the market is in a tricky zone: positively biased but cautious due to potential risks to profitability.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.