Chartist Talk: Nifty to open directly in 25,600–25,700 resistance zone today; Milan Vaishnav bets on 3 India–US deal-linked stocks

Milan Vaishnav is the MSTA, Founder of Gemstone Equity Research & Advisory Services

• Nifty needs to eventually cross and stay above 25,850 over the coming days for further rally
• Bank Nifty may hit 60,000 but likely to slightly underperform Nifty 50

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"We can expect the Nifty to open directly into the 25,600-25,700 resistance zone but it would be important to see that the gap up opening is sustained," said Milan Vaishnav, the MSTA, Founder of Gemstone Equity Research & Advisory Services in an interview to Moneycontrol.

Further to that, it would be crucial for the markets to go back inside the original 500-point trading zone created between 26,200 and 25,700. If this happens, then the primary trend would stay intact, he feels.

After the US-India trade deal, he advised buying Bharat Forge, Avanti Feeds, and HCL Technologies.

Will the Nifty 50 open with a strong gap-up around the 25,600–25,700 zone, which is a crucial resistance area, and could this bring strong momentum to the index?

Yes, a gap-up is expected today; we can expect the Nifty to open directly into the 25,600-25,700 resistance zone. Now, there are two things to it. First, it would be important to see that the gap up opening is sustained.

Markets will need to capitalize on the strong impetus that it has from the long-awaited trade deal. Further to that, it would be crucial for the markets to go back inside the original 500-point trading zone created between 26,200 and 25,700. If this happens, then the primary trend would stay intact.

What key Nifty levels should investors watch, and what is your trading strategy?

I would like to point out here that despite the Budget day volatility and the negative close at 24,825, the Nifty had defended the 50-week MA, which is placed at 24,842. This meant that despite the negative move, the primary uptrend was not disrupted. It would have been disrupted if the zone of 24,800-24,300 had been violated.

The crucial levels Investors need to watch are Nifty's ability to eventually cross above 25,850 and stay above it over the coming days.

So far as trading strategy goes, I would recommend allowing the markets to digest the developments in the first hour of the trade; only once this happens, we can look at fresh buying. We have recommended holding on to existing investments on Budget day also despite the negative move and would continue doing so today as well.

Do you expect a sharp spurt in the Nifty IT index, which has been in consolidation mode for a long time?

The IT Index is inside the leading quadrant of the Relative Rotation Graph (RRG). It has outperformed the broader Index and is likely to continue to do so. A spurt is also expected to be higher, which is expected to take it past 40,000 levels eventually.

Do you expect the Bank Nifty to hit the 60,000 mark?

Yes, if we look at a proportionate gap-up opening, this level may be tested. However, it is likely to slightly underperform the Nifty.

Which three stocks would you prefer to buy following the India–US trade deal, and why?

Bharat Forge

The stock may likely see a breakout today. The target may be placed around Rs 1,650 and a protective stop-loss should be placed at Rs 1,350.

The company is a direct beneficiary of lower tariffs and improved access to the US auto and industrial ecosystem. It is already deeply embedded in US OEM and defence supply chains, so incremental gains don’t require capacity reinvention.

Avanti Feeds

The stock is consolidating above its important cluster of support zones. Momentum indicators are favourable. We can expect a target of Rs 900 with a protective stop-loss placed at Rs 750.

Positives are the shrimp and seafood exports to the US that would benefit meaningfully from lower trade friction and better pricing power.

HCL Technologies

The stock is attempting a breakout from a large consolidation pattern. The momentum indicators remain supportive, and the lead indicators are showing mild bullish divergences. A target can be placed near Rs 1,775 with a protective stop-loss at Rs 1,600.

The US drives a large share of revenues for HCL Tech from digital transformation, cloud, and infrastructure projects

What is your reading of the gold and silver charts?

Both Gold and Silver have entered a consolidation phase. Volatility will persist, and the consolidation range may remain wider. While these levels may be used to make a fresh entry, it should be made in small tranches rather than a lump sum.

Do you expect the rupee to strengthen against the US dollar based on chart patterns?

While USD will likely remain in an uptrend, a mean-reversion in USDINR is likely. However, the dollar may continue to find support in the 90-90.25 zone, and further gains are unlikely.