Chartist Talk: Market likely to open 1-2% lower amid US-Iran conflict; selling may persist until Nifty reclaims 200-DEMA, Sudeep Shah highlights two stock bets

Sudeep Shah is the Head - Technical and Derivatives Research at SBI Securities

• Selling pressure may sustain until Nifty reclaims 200-DEMA
• Banking, oil marketing companies, aviation and auto stocks may see selling pressure
• IT and pharma could relatively outperform
• Bank Nifty may enter corrective or consolidation phase with choppy moves ahead

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If crude sustains above the psychological $80-85 mark and global markets remain weak, Indian equities could open with a gap-down bias, potentially in the range of 1-2 percent, said Sudeep Shah, the Head - Technical and Derivatives Research at SBI Securities in an interview to Moneycontrol.

According to him, immediate support lies at 24,950–24,900; a sustained breach could drag the index toward 24,600. Unless the index swiftly reclaims the 200-day EMA and FII outflows begin to moderate meaningfully, the broader market trend is likely to remain under pressure in the near term, he said.

He advised Chennai Petroleum Corporation, and Petronet LNG for this week. "Chennai Petroleum has given a decisive breakout backed by strong volumes, signalling renewed buying interest, while Petronet LNG MACD is in positive territory with a rising histogram, indicating strengthening momentum," he said.

Do you see the sharp gap-down opening in Nifty 50 following US-Israel attack on Iran?

Markets would perceive this US/Israel –Iran conflict not as a political headline but as an oil supply shock. The Strait of Hormuz handles roughly one-fifth of global oil flows, and the threat of the disruption of supply introduces an immediate risk premium into crude prices.

If crude sustains above the psychological $80-85 mark and global markets remain weak, Indian equities could open with a gap-down bias, potentially in the range of 1-2 percent. Banking, oil marketing companies, aviation and auto stocks may see early selling pressure, while IT and pharma could relatively outperform.

Much will depend on crude stability and currency movement during the first half of trade.

Technically, long-term moving averages have flattened and oscillators have turned neutral, signalling a pause in momentum.

However, Friday’s breakdown below the 200-day EMA tilts the bias slightly cautious. Immediate support lies at 24,950–24,900; a sustained breach could drag the index toward 24,600. On the upside, 25,450–25,500 remains a crucial resistance zone, with a breakout needed to revive bullish momentum in March.

What options strategy would you prefer to adopt for the current week?

Since Nifty has broken its 200-day EMA, which was a key support, the index is likely to retest lower levels. Open interest concentration around the 25,000 strike suggests this level could act as an immediate magnet. Selling pressure is visible at higher levels, with fresh short build-up observed in Friday’s session, indicating active participation from sellers.

Elevated IV levels indicate higher near-term volatility, and the overall setup suggests a weak bias. Hence, we recommend deploying a bear spread strategy by buying 25,150 Put and Selling 25,000 Put, as Nifty is likely to retest the 25,000–24,950 zone in the near term.

How are the FIIs positioned, and what is the data signalling?

FIIs ended February as net sellers to the tune of Rs 6,641 crore, extending their selling streak every month since July 2025. This persistent outflow has been one of the key reasons behind the market’s continued underperformance versus global peers.

While there was a brief phase of buying following the Union Budget and the India–US trade deal announcement, it proved short-lived and was quickly overshadowed by heavy selling. In fact, during the last two trading sessions of February alone, FIIs sold nearly Rs 11,000 crore worth of equities, highlighting the intensity of the distribution.

The sustained FII pressure has coincided with the Nifty slipping below its crucial support zone and closing beneath the 200-day EMA on the daily chart, a technically weak signal.

Unless the index swiftly reclaims the 200-day EMA and FII outflows begin to moderate meaningfully, the broader market trend is likely to remain under pressure in the near term.

Do you expect the Bank Nifty to maintain its outperformance over the Nifty 50 and defend its 50-day EMA next week?

Bank Nifty has outperformed broader indices in recent weeks, signalling relative strength in financials. However, momentum cooled last week as the index traded in a tight range for four sessions, reflecting market indecision. The consolidation ended on Friday with a downside breakout, indicating emerging short-term weakness.

The breakdown also pushed the index below its 20-day EMA, hinting at a shift in near-term sentiment. Additionally, the daily RSI has slipped below its 9-day average, with both trending lower—suggesting rising bearish momentum.

The index may now enter a corrective or consolidation phase with choppy moves ahead. Immediate support lies at the 50-day EMA around 60,000–59,900; a decisive breach could intensify selling. On the upside, 61,100–61,200 remains a key resistance, and only a sustained move above this zone may restore bullish traction.

Do you see a Tweezer Bottom pattern forming in Dixon Technologies? If yes, does it indicate that a sharp rally could be in the offing?

Yes, Dixon Technologies has formed a Tweezer Bottom pattern on the daily chart near the prior swing low zone of Rs 10,100–9,900. The pattern is supported by a sharp spike in volumes, which typically signals demand emerging at lower levels.

However, it’s important not to jump to the conclusion of an imminent sharp rally just yet. The broader chart structure still appears weak. The stock continues to trade below its key moving averages, the MACD line remains below both the zero line and the signal line, and overall momentum has not convincingly turned bullish.

For the pattern to translate into a meaningful upmove, the stock needs to reclaim and sustain above Rs 11,000, where the 20-day EMA is currently placed. Until that level is decisively crossed with follow-through buying, the trend is likely to remain fragile despite the early reversal signal.

Do you expect the rally to continue in Siemens and Sai Life Sciences?

Siemens has delivered a decisive range breakout after a prolonged consolidation since May 2025, backed by robust volumes and steady consolidation near swing highs. On the weekly chart, a strong follow-up bullish candle with 6.6% gains signals active accumulation. Momentum indicators remain supportive. MACD is in positive territory, RSI is above 60, and rising ADX reflects strengthening trend momentum. The upward-sloping 20- and 50-day EMAs further reinforce the positive structure.

Sai Life Sciences has also triggered a horizontal trendline breakout and continues to trade above its key short- and long-term moving averages. With RSI above 60 and DI+ positioned over DI-, buying strength is evident. As long as the stock holds above the Rs 925–920 support zone, the trend is likely to remain positive.

What are your top two buy ideas for next week?

Chennai Petroleum Corporation

Chennai Petroleum Corporation was consolidating in the Rs 938–865 range since February 10 and has now given a decisive breakout backed by strong volumes, signalling renewed buying interest. The RSI is trending higher, reflecting improving bullish momentum, while the widening DI lines on the ADX indicate buyers are firmly in control.

Importantly, the stock has closed above the upper Bollinger Band, which typically points to strong upside momentum and the possibility of a volatility expansion in the direction of the trend. The up move is likely to extend as long as the breakout levels hold. Hence, we recommend accumulating the stock in the zone of Rs 965-960 with a stop-loss of Rs 935. On the upside, it is likely to test the level of Rs 1,030 in the short term.

Petronet LNG

The stock has recently given a downward sloping trendline breakout on a daily scale. On the indicators front, MACD is in positive territory with a rising histogram, indicating strengthening momentum. RSI has sustained above 60, while a rising ADX reflects improving trend strength.

The stock is trading comfortably above its 20-day and 50-day EMAs, indicating a positive structure. Overall setup suggests a positive bias. Hence, we recommend accumulating the stock in the zone of Rs 325–322 with a stoploss of Rs 312. On the upside, it is likely to test the level of Rs 350 in the short term.