D-St Week Ahead: Nifty to remain indecisive; time to avoid fresh aggressive buying

The markets traded in a slightly buoyant yet range-bound manner over the past week and ended on a positive note. The Nifty oscillated within a narrow band of 300.80 points through the week, moving between a high of 25,153.65 and a low of 24,852.85 before closing at 24,870.10. India VIX continued to cool off, slipping 5.08% on a weekly basis to settle at 11.73, reflecting reduced volatility expectations. Nifty gained 238.80 points, marking a weekly advance of 0.97%.

We have a truncated week ahead as Wednesday is a trading holiday on account of Ganesh Chaturthi. The broader structure of the Nifty remains within a maturing consolidation phase inside a large symmetrical triangle on the weekly chart.

The index continues to test the upper trendline of this formation, which coincides with the overhead resistance of 25,100–25,150 on the daily timeframe. This zone remains a supply area, especially with the daily chart indicating short-term congestion. While markets have not been in a strong trend, they are pressing against critical resistance, and a decisive breakout above 25,150 could potentially open up incremental upside momentum. Conversely, any failure to move past this range could reinforce the consolidation bias.

Given the backdrop of dovish commentary from Fed Chair Jerome Powell, global sentiment may aid a positive start to the truncated week, especially after he hinted at a potential rate cut in September. That said, the first half of the week may witness a gap-up opening. However, Nifty will likely find resistance around 25,000–25,150 once again. On the downside, immediate support is expected at 24,650, followed by 24,475.The weekly RSI stands at 55.06 and remains neutral; it does not show any bearish or bullish divergence against price. The weekly MACD remains below its signal line and continues to show a negative histogram, reflecting the ongoing lack of momentum. No clear bullish candle pattern has emerged, and the current weekly candle is relatively small, reinforcing the indecisive nature of the index at this level.Pattern analysis shows that Nifty is still trading within a broad symmetrical triangle, which began forming in September 2024. The longer Nifty remains capped below this resistance line, the more crucial the eventual move becomes—either a breakout or breakdown could usher in a directional move. The 20-week and 50-week moving averages are comfortably placed below the current price, suggesting an overall bullish bias, albeit lacking momentum for now.Given the current technical backdrop and the fact that the week ahead is truncated due to the holiday on Wednesday, market participants would do well to approach the week with a balanced outlook. Fresh aggressive buying should be deferred until Nifty stages a decisive breakout above 25,150.Until then, a selective, stock-specific approach with strict stop-losses should be favored. Focus should remain on protecting gains and being responsive rather than anticipatory. The method for the coming week should center around cautious optimism with active monitoring of the 25,100–25,150 resistance zone.

In our look at Relative Rotation Graphs® (RRG), we compared various sectors against the CNX500 (Nifty 500 Index), representing over 95% of the free-float market capitalization of all listed stocks.

Relative Rotation Graphs show that the Auto Index is the only group inside the leading quadrant maintaining its relative momentum. All other Nifty Sector Indices, such as Infrastructure, Metal, PSU Bank, Realty, Media, Energy, and Midcap 100, are also within the leading quadrant but are slowing in relative momentum against the broader Nifty 500 Index.

The Nifty Financial Services, PSE, and Bank Index are inside the weakening quadrant. The Commodities Index has rolled into the lagging quadrant and now lingers with the Consumption and Service Sector Indices.

The FMCG Index has rolled into the improving quadrant and may begin its phase of relative outperformance. The IT Index remains within the improving quadrant, slowing its relative momentum while maintaining key support on the charts.

Important Note: RRGTM charts show the relative strength and momentum of a group of stocks. In the above chart, they depict relative performance against the Nifty 500 Index (broader markets) and should not be used directly as buy or sell signals.

(The author is Milan Vaishnav, CMT, MSTA)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)