In the broader market, the Midcap index scaled a new all-time high, rising nearly one and a half percent. The Smallcap index lagged but still finished with modest gains, indicating a phase of selective participation.
With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ET Markets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:
Nifty took support at a crucial level on the daily chart and showed some indecision. However, the weekly chart made a green candle after 3 weeks of selling pressure. What can be inferred about the outlook for the next week?
The benchmark index Nifty has delivered a strong rebound after finding firm support in the 25,300–25,330 zone, a level that aligns with the confluence of the 50-day EMA and the 50% Fibonacci retracement of its previous rally from 24,587 to 26,104. This technical cluster acted as a robust base, sparking a sharp recovery. From the recent low of 25,318, the index has surged nearly 700 points in just five trading sessions.
On Friday, Nifty opened with a gap down and moved sideways for most of the session. However, a sharp late-hour rebound flipped the tone, aided by a sentiment boost as the NDA gained a clear lead in the Bihar elections. Finally, the index has ended the week above the 25,900 mark with a gain of 1.64% and it has formed a bullish candle, reinforcing optimism. Adding to the positive narrative, Nifty Midcap 100 and Bank Nifty scaled fresh all-time highs during the week.From a technical perspective, Nifty is now trading comfortably above its key moving averages, all of which are trending upward—a sign of sustained bullishness. The daily and weekly RSI indicators remain in positive territory, further supporting the case for an extended uptrend. We expect the index to maintain its northward trajectory and potentially test 26,200, followed by 26,500, in the short term.On the downside, the 20-day EMA zone of 25,700–25,650 is likely to act as a critical support area. A breach below this could trigger profit-booking, but as long as this zone holds, the bias remains positive.
On the weekly chart, Nifty witnessed profit booking from higher levels, surrending substantial gains. Why do you think that is? What’s ahead?
On the weekly chart, Nifty saw profit booking at higher levels, trimming minor gains—a typical reaction after a sharp rally near resistance zones. Despite this pause, the trend remains positive as the index trades above key moving averages with bullish momentum indicators. We expect Nifty to resume its upward move in the next couple of sessions, with potential targets at 26,200 and 26,500, while 25,700–25,650 stays as crucial support.
What are the key events to watch for the upcoming week now?
The release of the Reserve Bank of India’s credit/deposit growth and foreign exchange reserve data. Strong numbers could reinforce bull-market confidence. Globally, in the US, key events include core inflation readings and the Federal Open Market Committee comments. Both could shift interest-rate expectations and equity valuations. On both sides, surprise strength or weakness can drive sharp directional moves, making these the primary events that could steer index momentum and investor sentiment in the coming week.
What do you think the outcome of the Bihar election looks like for our markets?
The Bihar election outcome failed to trigger a major market reaction, as the NDA’s comfortable lead was widely anticipated and largely priced in. While the verdict reinforces political continuity and is structurally positive for sentiment, especially for infrastructure, PSU banks and state-linked sectors, traders mostly adopted a cautious stance throughout the day. Weak market breadth and profit-booking reflected the fact that the Street is now looking beyond the election and focusing on larger catalysts such as the upcoming RBI MPC and the US Fed’s FOMC meeting. In the near term, expect some volatility, but broadly, the result removes a minor political overhang and keeps the medium-term outlook stable with a buy-on-dips undertone.
Bank Nifty is facing strong resistance near its all-time high levels. Why is that? And what can give it a push now?
After three consecutive weeks of sideways consolidation, Bank Nifty has finally broken out, delivering a strong upside rally and marking a fresh all-time high. The index ended the week above the 58,500 mark, forming a sizeable bullish candle on the weekly chart—a clear indication of renewed strength in the banking space.
Currently, the index is trading at record levels, and all major moving averages are aligned in an upward trajectory, signalling a robust bullish trend. Momentum indicators reinforce this view: both daily and weekly RSI remain firmly in bullish territory, while the MACD histogram on the weekly scale suggests a pickup in upside momentum, adding conviction to the breakout.
Going ahead, the zone of 58,700–58,800 will act as a key resistance area. A sustained move above 58,800 could trigger a sharp rally toward 59,500, followed by 60,200 in the short term. On the downside, the 20-day EMA zone of 57,800–57,700 is expected to provide strong support, keeping the overall bias positive as long as this level holds.
In your opinion, how should one strategize in Bank Nifty to gain from the index?
We feel one should continue to focus on quality Midcap Banks as well as PSU Banks, as there is a possibility of continuation of outperformance in that space compared to Private Banks. Also within the private banking space, Axis Bank is technically well placed to outperform in the coming days.
Do you expect re-rating in any sectors in the near future based on their Q2 results and guidance?
We have a positive outlook on Nifty Private Bank, PSU Banks, Financial Services, India Defence, Automobile, Oil & Gas, Capital Market, Infrastructure, and Pharma and we feel these sectors are likely to continue their outperformance in the short term.
On the other hand, Nifty FMCG, India Tourism and Media are likely to underperform in the short term.
Similarly, which stocks do you think one can bet on after the Q2 earnings season?
Technically, AXISBANK, CUB, GRSE, BANKBARODA, BELRISE and BEL are likely to outperform in the short term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
