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Indian markets roared back to life on Friday, breaking a five-day losing streak as tech and banking stocks led the charge. Companies across IT, banking, and auto sectors drove the day's gains, helping markets reclaim key levels in a broad-based rally. The benchmark Nifty50 climbed to 23,907.
25, while the Sensex jumped to 79,117, marking a strong reversal from recent losses. Analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, at SBI Securities interacted with ET Markets, sharing his outlook on the Indian markets. Following are the edited excerpts from his chat: Nifty is above its 200 DEMA now.
What is the short-term outlook on the index? From its all-time high of 26277, the benchmark index Nifty had tumbled over 11% in just 36 trading sessions, experiencing a swift and sharp correction. However, Thursday brought a glimmer of hope as the index found solid support near the 61.8% Fibonacci retracement level of its prior rally (21281–26277) and bounced back smartly.
In technical parlance, the 61.8 percent Fibonacci retracement level is known as the "golden ratio," which often acts as a pivotal turning point, sparking optimism for a potential trend reversal. Along with this pullback rally, the index has surged above its 200-day EMA level.
Also, the daily RSI has given a bullish crossover. Now, the million-dollar question is it just a retracement or a reversal? We feel the pullback rally is likely to continue for the next couple of trading sessions. Stock Trading A2Z of Stock Market for Beginners: Stock Market Course For Beginners By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Commodity Markets Made Easy: Commodity Trading Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Market 101: An Insight into Trendlines and Momentum By - Rohit Srivastava, Founder- Indiacharts.
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While, on the downside, any sustainable move below the level of 23.450 will lead to resume its southward journey. In that case, it is likely to test the level of 23150, followed by 22,800 in the short term.
Given the options data, do you see an upmove in the Nifty before the next series begins? Does the index give any indication for an upmove? Talking about the Nifty option chain, there is a notable concentration of call open interest at the 24000 strike, followed by the 24,200 strike. While significant open interest on the put side is observed at the 23800 strike, followed by the 23,700 strike. As per the Straddle cost of ATM strike, the range for the next couple of trading sessions will be the 24,252-23496 level.
Compared to Nifty, Bank Nifty seems better placed. It was able to take support on the crucial 200 DEMA as well as is placed at its support zone. Do you think an upmove is possible? Or do you see a consolidation or maybe even a downtrend? The banking benchmark index, Bank Nifty, has been strongly outperforming the frontline indices over the past five trading sessions.
Notably, on Thursday, the index found solid support near its 200-day EMA, triggering a sharp upside rally. By the week's end, it posted a gain of nearly 2%. An intriguing observation is that during the recent correction, the index's daily RSI consistently held above the 40 mark.
This resilience signals that Bank Nifty remains firmly in the bullish zone as per the RSI range shift rules. Hence, we feel that Bank Nifty is likely to continue its outperformance in the short term. Talking about levels, the zone of 51400-51500 will act as an immediate hurdle for the index.
Any sustainable move above the level of 51500 will lead to a sharp upside rally upto the level of 51,900, followed by 52,400 in the short term. While, on the downside, the zone of 50,600-50,500 will act as immediate support for the index. Considering that Bank Nifty is slightly better, any stocks from the index? Federal Bank has been strongly outperforming the frontline indices since the last couple of trading sessions.
It has marked a fresh all-time high on Thursday. Most noteworthy, the stock is moving higher along with the relatively higher volume, which indicates strong buying interest from market participants. The ratio chart of the stock as compared to Nifty has given a consolidation breakout, which is a bullish sign.
As the stock is trading at an all-time high level, all the moving averages and momentum-based indicators suggest strong bullish momentum in the stock. The daily RSI is in bullish territory, and it is in rising mode. Hence, we recommend accumulating the stock in the zone of 210-208 level with a stop loss of Rs 202.
On the upside, it is likely to test the level of 220, followed by 230 in the short term. With dragging indices, do you see any sectors for the traders to hide? We feel traders should look for opportunities in the Nifty IT space. It has given a downward-sloping trendline breakout on a daily scale.
The ratio chart of the Nifty IT index as compared to Nifty is at 128-week high, which shows sustained outperformance. The momentum indicators and oscillators also suggest strong bullish momentum in the index. Talking about level, the index is likely to test the level of 44000, followed by 44800 in the short term.
While, on the downside, the zone of 42600-42500 will act as immediate support for the index. Let’s talk about Indian Hotels, it has given promising commentary on the company’s strategy. It is one of the strength-displaying stocks, even trading at its all-time high.
Any positions? The Indian Hotel has been strongly outperforming the frontline indices since the last couple of trading sessions. During the week, it has marked a fresh all-time high for the three consecutive trading sessions. Most noteworthy, during this outperforming phase, the volume activity is mostly above average, which indicates strong participation from the market participants.
The momentum indicators and oscillators are also suggesting strong bullish momentum in the stock. Hence, we believe it is likely to test the level of Rs 850, followed by 870 in the medium-term. While on the downside, the zone of 760-750 is likely to provide a cushion in case of any immediate decline.
Have you spotted any other stocks that are displaying strength in a weak market? If yes, any strategies or recommendations? HCLTECH: The stock is strongly outperforming the frontline indices, and it is moving higher along with relatively higher volumes. Interestingly, the daily RSI has given a downward-sloping trendline breakout, which indicates bullish momentum is picking up. Hence, we recommend accumulating the stock in the zone of Rs 1,900-1,880 level with a stop loss of Rs 1820.
On the upside, it is likely to test the level of Rs 2,000, followed by Rs 2,050 in the short term. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel ).
