Chartist talk: Momentum cooling? Sudeep Shah flags caution after shooting-star formations in Nifty, Bank Nifty

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

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26 Aug, 2025 12:21

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The formation of a Shooting Star–like candlestick pattern on the weekly chart is a potential sign that the uptrend is losing steam in Nifty 50 and Bank Nifty, Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, said in an interview to Moneycontrol.

But, "still, a confirmation in the form of a bearish follow-through candle is needed to validate any reversal signal," he added.

Meanwhile, after 48 percent rally since August, Sudeep Shah sees the possibility of profit booking or consolidation in Sammaan Capital, while he bets on Hindalco and Cholamandalam Investment and Finance Company for next week.

The Indian equity market has witnessed a stellar rally this October, with the benchmark Nifty surging over 1,500 points from its low of 24,588 — all within just 15 trading sessions. This swift upswing highlights strong bullish momentum, driven by festive cheer, robust domestic inflows, and improving global cues.

During the Diwali week, Nifty came tantalizingly close to its all-time high, raising expectations of a breakout. However, the index couldn’t hold on to the gains and saw profit booking, indicating that investors may be adopting a more cautious stance after the steep rise.

This pause in momentum has resulted in the formation of a Shooting Star–like candlestick pattern on the weekly chart — a potential sign that the uptrend is losing steam. The pattern reflects that bulls attempted to drive prices higher but faced selling pressure near the top. Still, a confirmation in the form of a bearish follow-through candle is needed to validate any reversal signal. The daily RSI, which had peaked at 72.69, has now eased to 67.19 and is trending lower, adding to the cautious sentiment.

On the macro front, the market is awaiting clarity on the India–US trade deal, which could act as a major trigger for the next directional move. With technical indicators cooling off and global developments under watch, the coming sessions will be decisive in determining whether this is merely a temporary pause or the start of a deeper correction.

From a technical perspective, the 25,550–25,500 zone will serve as a key support area, being the confluence of the 13-day EMA and the 38.2 percent Fibonacci retracement of the recent upswing (24,588–26,104). On the upside, the 25,950–26,000 range will act as a crucial resistance zone. A sustained move above 26,000 could open the doors for a sharp rally toward the 26,300 level.

The Bank Nifty index surged to a new all-time high on Thursday, showcasing strong sectoral momentum and solid investor confidence. However, the index struggled to hold above the crucial 58,500 mark and soon faced profit booking, hinting at a short-term shift in sentiment after a sharp rally.

This retracement resulted in the formation of a Shooting Star candlestick pattern on the weekly chart — a technical indicator that often signals potential trend exhaustion.

Further supporting this cautious view, the daily RSI has started to weaken. After reaching a peak of 76, it has now given a bearish crossover and is trending lower, typically indicating a loss of momentum and the likelihood of a consolidation phase.

With Bank Nifty positioned at a critical juncture, traders will be watching upcoming sessions closely for confirmation. Whether this move turns out to be a brief pause or the beginning of a deeper correction will depend on how prices behave in the next few trading days.

On the technical front, the 57,000–56,900 zone will serve as a key support area, coinciding with the 38.2 percent Fibonacci retracement level of the recent upmove. On the upside, resistance is placed around 58,200–58,300. A sustained move above 58,300 could trigger a sharp rally toward 59,000 and then 59,500 in the short term.

Sammaan Capital has delivered an impressive 48 percent rally since the start of August, currently trading well above all key moving averages. However, technical indicators suggest the stock may be approaching a peak.

The ADX has climbed to 51.08, its highest level since August 2023, indicating a very strong trend, while the RSI has surged to 81.15, marking extreme overbought conditions not seen since June 2021. These signals point towards the likelihood of near-term profit booking or a consolidation phase. That said, the stock remains in a strong uptrend, and further upside is possible once it undergoes a healthy correction to absorb short-term gains.

National Aluminium Company (NALCO) continue to display strong bullish undertones, supported by robust price structures and positive technical signals. NALCO broke out of its Rs 220–230 consolidation zone on strong volumes. The RSI and ADX are rising, reflecting growing trend strength, while the MACD crossover reinforces bullish momentum. With both stocks trading above key moving averages and the Metal Index at a record high, the outlook remains firmly positive for the days ahead.

Cholamandalam Investment and Finance Company has finally broken past the strong resistance zone of Rs 1,680–1,700, a level that had capped the stock’s upside on three previous occasions since April. The breakout on Friday came with robust volumes, adding conviction to the move. On the daily chart, the stock maintains a higher high–higher low formation, reflecting a strong underlying uptrend. It continues to trade comfortably above both short- and long-term moving averages, underscoring sustained momentum.

The ADX indicator is rising, signalling strengthening trend dynamics, while the RSI has turned upwards, indicating renewed buying interest. These factors together suggest the stock could see further upside in the near term. Hence, we recommend accumulating the stock in the zone of Rs 1,735-1,725 with a stop-loss of Rs 1,675. On the upside, it is likely to test the level of Rs 1,850 in the short term.

Hindalco Industries hit a fresh all-time high of Rs 827 in Friday’s session, extending its strong upward momentum. The Hindalco/Nifty ratio chart has given a fresh breakout, highlighting the stock’s relative outperformance within the broader market. Price action remains constructive, moving in a higher high–higher low formation, with the 20-day EMA acting as a firm support throughout the rally.

The Rs 790–800 zone, which earlier served as a key resistance, was taken out decisively with strong volumes. The DI lines in the ADX indicator are widening, indicating a strengthening trend, while the MACD slope is turning upward, suggesting increasing bullish momentum in the stock. Hence, we recommend accumulating the stock in the zone of Rs 825-815 with a stop-loss of Rs 790. On the upside, it is likely to test the level of Rs 880 in the short term.

Cummins India appears poised for a strong up move after breaking out of a Stage-2 Cup pattern. The breakout, confirmed by robust follow-through buying on Friday, signals renewed bullish momentum. The stock has also closed above the upper Bollinger Band, indicating strong buying interest and the potential start of a new leg higher.

Adding to the optimism, the MACD has generated a bullish crossover above the signal line, with rising histogram bars pointing to accelerating upward momentum. Overall, the price action coupled with technical indicators and oscillators reinforces a positive bias for further gains in the near term.