Additionally, Indian equity benchmarks topped the list of Asian indices in terms of weekly gains for the period ended March 22.
The Nifty and Sensex recorded the strongest performance among regional markets, posting weekly gains of over 4% each.
Analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, at SBI Securities interacted with ET Markets regarding the outlook on Nifty and Bank Nifty for the upcoming week. Following are the edited excerpts from his chat:
What is the broader outlook on the market going forward?
Just like a T20 game where momentum can shift in a matter of overs, the stock market has shown a stunning comeback this week. After consolidating for a while, Nifty broke out on Tuesday and delivered a power-packed rally, closing the week at 23,350 with a stellar 4.26% gain. This was its best weekly performance since February 2021, proving that, much like cricket, market sentiment can change instantly!The decline in volatility further reinforces this shift, with India VIX dropping over 5% during the week. As VIX trades below both its short and long-term moving averages, market sentiment appears calm, signaling a return of risk-on mode to D-Street. A stable VIX typically supports a bullish outlook, paving the way for continued upward momentum in equities.From its recent low of 21,964, Nifty has surged nearly 1,400 points (6.31%) in just 13 trading sessions, which was much in line with our expectations. The index has not only crossed its 20 and 50-day EMAs but is now testing its 100 and 200-day EMAs. Meanwhile, the daily RSI remains in bullish territory and continues to rise, signaling strong momentum.Hence, we believe the index is likely to continue its northward journey in the short term. However, much like teams pacing themselves in a long tournament, the market may take a short breather over the next 2-3 trading sessions. But just as every IPL match has its standout performers, stock-specific action is expected to remain strong!
Talking about crucial levels, the zone of 23,130-23,100 is likely to provide a cushion in case of any immediate decline. On the upside, it is likely to test the level of 23,600, followed by 23,800 in the short term.
Nifty broke above its falling trendline and gave a neckline breakout of a double bottom. Does this give enough confirmation about the reversal in the trend?
The neckline breakout of the double bottom pattern is not visible on the chart. However, the downward sloping trendline breakout, along with momentum indicators, gives enough confirmation about the trend reversal.
Thoughts on Bank Nifty? Is it looking good for a positional bet?
Bank Nifty has strongly outperformed the frontline indices, surging over 5% last week, which was its best weekly performance since December 2023. On a weekly scale, it has formed a sizeable bullish candle, reinforcing the strength of the ongoing recovery. The index has decisively moved above its short and long-term moving averages. Notably, the 20 and 50-day EMAs are gaining upward momentum, while the declining slope of the 100 and 200-day EMAs has slowed significantly, which is a bullish sign.
Momentum indicators are also aligning with this bullish sentiment. The daily RSI remains in a strong position, continuing its upward trajectory, while the daily MACD histogram suggests an acceleration in buying momentum—both pointing towards further strength in the coming sessions.
Key levels for Bank Nifty.
Talking about crucial levels for the Bank Nifty, the zone of 50,100-50,000 will act as a crucial support area for the index. As long as it sustains above the psychological 50,000 mark, the path remains open for an upside move toward 51,100, followed by 51,700 in the short term.
What are your thoughts on FII-DII selling? Now when FIIs decided to turn buyers, the DIIs decided to book profits. What do you think is happening here?
We believe FIIs will continue to increase their exposure in Indian markets, given our strong outperformance against US indices. The ratio chart of Nifty as compared to S&P 500 has given a falling wedge pattern breakout, signaling further relative strength. Additionally, the recent decline in the US Dollar Index supports a “risk-on” sentiment, reinforcing bullish momentum in our market.
What are your views on Bharti Airtel & Indigo?
Bharti Airetl
The stock of Bharti Airtel has given a downward-sloping trendline breakout on a daily chart. This breakout is confirmed by robust volume. Currently, the stock is trading above its short and long-term moving averages, which is a bullish sign. The daily RSI is in bullish territory, and it is in rising mode. Hence, we believe the stock is likely to continue its bullish momentum in the short term.
Indigo
The stock has strongly outperformed the frontline indices since the last couple of trading sessions. Recently, the stock has given a consolidation breakout and thereafter witnessed a sharp upside rally. However, currently, the daily RSI has tested the overbought region as per RSI range shift rules. Hence, we believe it is likely to slide into the period of consolidation for the next couple of trading sessions.
What are your views on Bajaj Finance & Manappuram Finance?
Bajaj Finance
Since the last couple of months, the stock has been strongly outperforming the frontline indices. Recently, it has given a consolidation breakout on a daily scale. 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. Hence, we believe the stock is likely to continue its northward journey in the short term.
Manappuram Finance
On a weekly scale, the stock of Manappuram Finance has given a stage-2 cup pattern breakout. This breakout is confirmed by above 50-week average volume. In addition, the stock has formed a sizeable bullish candle on a breakout week, which adds strength to the breakout. The moving averages and momentum indicators also suggest strong bullish momentum in the stock. Hence, we believe the stock is likely to continue its bullish momentum in the short term.
What do you have to say about the performance in the banking and NBFC space? What can be the positioning there and do you have any stock recommendations?
Nifty Private Bank and Nifty Financial Services have been strongly outperforming the frontline indices for the last couple of weeks. Considering the current chart structure, both sectors are likely to continue their upward journey in the next couple of trading sessions. Among the constituents of the above indices, Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Bajaj Finance, Chola Finance, MCX, LIC Housing Finance are looking good.
Any other sectors or stocks to watch?
Nifty Private Bank has given a symmetrical triangle breakout on a daily scale, signaling strength and the potential for further upside. Also, it has surged above its short and long-term moving averages. Hence, we believe it is likely to continue its northward journey and test the level of 25600, followed by 26000 in the short term.
Beyond this, sectors such as Nifty Financial Services, CPSE, PSE, Pharma, and Healthcare are expected to maintain their strong performance, continuing to lead the market higher.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
