Sensex closed nearly 456 points lower (0.58%) at 78,499 while Nifty 50 fell only 65 points (0.27%) to end the session at 24,571. Broader markets were mixed, with Nifty Smallcap 100 closing in the red, while Nifty Midcap 100 gained 0.2%.
Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty and smallcaps, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:
1) What is your view on Nifty and Sensex for the coming week?
The market spent another week searching for direction. Although Nifty started the week with a technical breakout above a downward-sloping trendline on the daily chart, the move quickly lost momentum as buyers failed to capitalize on the breakout. The result was a remarkably narrow trading range of just 346 points, the tightest weekly range since the last week of December 2025. Historically, such low-volatility phases seldom persist, often paving the way for a sharp directional move.On the weekly chart, the index formed a Doji candle, reflecting indecisiveness among market participants. Despite the lack of directional conviction, Nifty continues to trade above its key short-term and long-term moving averages, indicating that the broader trend remains constructive. However, momentum indicators and oscillators continue to portray a sideways bias, suggesting the market is waiting for a fresh trigger before its next meaningful move.
Going ahead, the zone of 24,700-24,750 is likely to act as an immediate hurdle for the index. A decisive move above 24,750 could trigger a fresh rally towards the psychological level of 25,000, followed by 25,200 in the short term.On the downside, the 200-day EMA zone of 24,400-24,350 is expected to provide strong support. The index is now approaching a crucial technical inflection point, and whichever side breaks first is likely to dictate the market’s next major trend.Last week, the benchmark index Sensex traded within a narrow range of 931 points. On the weekly chart, it formed a small-bodied candle with shadows on both sides, reflecting a phase of indecision among market participants.
From a trend perspective, the index continues to trade above its 20-day, 50-day, and 100-day EMAs, underscoring the presence of a broader positive bias. However, it has been hovering around its 200-day EMA over the past five trading sessions, indicating a lack of clear directional momentum. Momentum indicators also point towards consolidation, with the daily RSI slipped below the 60 mark. Additionally, the daily ADX is currently placed at 12.36, suggesting weak trend strength and the absence of a decisive move in either direction.
Going forward, the 79,100-79,200 zone remains a critical resistance area. A sustained breakout above 79200 could trigger a strong upside move towards 80000, followed by 80700 in the short term.
On the downside, the 20-day EMA region of 77,800-77,700 is expected to provide immediate support. A hold above this zone would help maintain the prevailing positive undertone, while a breach could lead to increased selling pressure.
2.) Smallcap index rose nearly 3% this week, outperforming midcaps and largecaps. What’s the strategy going ahead?
The Nifty Smallcap 100 continued to outperform its midcap and largecap peers during the week, gaining nearly 3% and scaling a fresh all-time high. The index displayed strong relative strength and formed a robust bullish candle on the weekly chart, reflecting sustained buying interest across the broader market.
A key technical development was the breakout above a horizontal trendline resistance, which signals a continuation of the prevailing uptrend. This breakout is backed by healthy price action and suggests that the smallcap segment could continue to attract investor interest in the near term.
From a trend perspective, the index remains comfortably positioned above its key short and long-term moving averages, while momentum indicators and oscillators continue to maintain a positive bias. These signals indicate that the broader bullish structure remains firmly intact.
Going ahead, the 19,550-19,500 zone will act as a crucial support area for the Nifty Smallcap 100. As long as the index sustains above 19,500, the positive momentum is likely to continue, with potential upside targets placed at 20100 and 20,400 in the short term.
Investors and traders should maintain a buy-on-dips approach, with any decline towards the support zone being viewed as an opportunity to accumulate quality smallcap stocks.
3.) What is the options data indicating about Nifty’s near-term trading range, and where are the key Call and Put positions building up?
For the entire week, Nifty consolidated within the 24,774–24,428 range, reflecting a phase of consolidation after witnessing a sharp pullback from the low of 23,606 in the last week of July.
Looking at the options data, the 24,800 strike has witnessed aggressive Call writing, with Call open interest nearly 10 times higher than Put writing, making it a strong resistance zone. A decisive breakout above 24,800 could trigger fresh short covering and pave the way for further upside.
On the downside, the 24,300 strike has significant open interest, with Put writing nearly seven times higher than Call writing. This makes 24,300 an important support level. However, a sustained breach below this mark could force Put writers to unwind their positions, potentially accelerating the downside.
Therefore, the 24,300–24,800 zone is likely to remain the key trading range for Nifty, with a decisive breakout on either side setting the tone for the next directional move.
4.) What is the FII activity looking like with respect to Long-Short Ratio?
The FII Long-Short ratio stood at its lowest level of 7.79% on July 23. The following day, Nifty made a swing low of 23,606 and subsequently witnessed a sharp pullback of more than 4%. During this period, the Long-Short ratio steadily improved, reaching 12.91% on August 7. At the same time, net Index Futures contracts moved from -2.63 lakh to -1.50 lakh, indicating significant short covering by FIIs, which aided Nifty’s recovery.
The 24,800 level remains an important resistance to watch. A strong and decisive breakout above this level could trigger further short covering by FIIs, potentially helping Nifty extend its gains.
5.) What would be your preferred F&O strategy for August: buy on dips, sell on rallies or trade the range?
Given that Nifty continues to trade above its key short and long-term moving averages, while major support is placed near the 24,400-24,350 zone, the broader trend remains constructive despite the ongoing consolidation. Hence, our preferred strategy for the August series would be “Buy on Dips.”
While the index has been moving in a narrow range and momentum indicators are currently neutral, we believe the consolidation is likely to serve as a base-building process before the next directional move. Traders can utilize declines towards key support levels to create long positions, with a sustained move above 24,750 potentially opening the doors for 25,000-25,200 in the near term.
6.) What should be the strategy for SBI, Trent, Kalyan Jewellers, and Swiggy?
Trent formed a sizable bearish candle on the daily timeframe on August 7 and slipped below its 20-day EMA, indicating some weakness in the near-term trend. The RSI has witnessed a sharp decline from above the 60 mark, signalling a shift in momentum from bullish to bearish. The Rs 3,130–3,150 zone is likely to act as an immediate resistance, and the stock may remain sideways to bearish as long as it trades below this zone.
Kalyan Jewellers formed a thin-bodied candle with a noticeable upper wick, indicating profit booking at higher levels. Despite the profit booking, the stock continues to trade above key short and long-term moving averages. Following a breakout above a downward-sloping trendline on the weekly timeframe five weeks ago, the stock has moved sharply higher. The Rs 560–550 zone is likely to act as immediate support, and the stock may extend its uptrend as long as it sustains above this zone.
Swiggy has been consolidating within the Rs 305–277 range for the last seven trading sessions. The consolidation follows a strong pullback from the low of Rs 243 recorded on July 24. The ADX has turned flat, reflecting a period of low volatility and lack of a clear directional trend. A decisive breakout on either side of the range is likely to provide the next directional cue for the stock.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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