Chartist Talk: Sudeep Shah bets on Indus Towers, Nestle India, City Union Bank for Budget day

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

• Expect Volatility to pick up sharply over next 2–3 sessions
• 25,550–25,600 to be a stiff resistance for Nifty 50
• 24,950–24,900 band remains a critical support area

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Sudeep Shah, the Head - Technical and Derivatives Research at SBI Securities sees the absence of clear directional strength in the Nifty 50 tracking momentum indicators, but bets on Indus Towers, Nestle India, City Union Bank for Budget day.

According to him, the technical setup suggests a potential breakout and further upside in Indus Towers, while with the RSI sustaining above 60, price action and momentum indicators point towards continuation of the ongoing up move in Nestle India.

In case of City Union Bank, he said CUB/Private Bank ratio chart has given a fresh breakout, highlighting potential relative outperformance of the stock within the sector. Overall, price action and indicators suggest the stock is well-positioned for a breakout and move higher, he said.

Are you more bullish on the Nifty 50 rallying toward 25,700 than bearish about a retest of the January low on Budget day?

Over the past seven trading sessions, the benchmark Nifty index has been locked in a narrow trading range of just 539 points (24,919–25,458). Despite this compression, the index saw weekly gains of over 1%, forming a small-bodied candle with long wicks on both sides on the weekly chart. Such a structure typically signals hesitation and lack of conviction, as market participants stay cautious ahead of the Union Budget 2026—a pivotal event known to reshape sectoral narratives and investor sentiment. But when indecision stretches this long, it often sets the stage for something far bigger.

A seven-session phase of counter-trend consolidation has led to the development of a Bearish Flag–like structure on the charts. This pattern has emerged after a sharp 5% correction within just 11 trading sessions. Technically, Nifty continues to hover around its crucial 200-day EMA, reinforcing its role as a long-term support zone. However, the index remains decisively below its 20, 50, and 100-day EMAs. Momentum indicators, too, point toward a sideways bias, highlighting the absence of clear directional strength. The calm on the surface, however, may be hiding a coiled spring underneath.

Looking ahead, volatility is expected to pick up sharply over the next 2–3 sessions, with the Union Budget 2026 scheduled to be presented by the Finance Minister on February 1. From a level’s perspective, the 25,550–25,600 zone—where the 20-day and 100-day EMAs converge will act as a stiff resistance, while the 24,950–24,900 band remains a critical support area. A decisive breakout beyond either side could open the door to a strong directional move. Until then, the event-driven uncertainty warrants a cautious, risk-managed approach rather than aggressive positioning.

Do you expect the Bank Nifty to hit fresh highs on Budget day?

The benchmark Bank Nifty index continues to stand out as one of the market’s strongest performers, consistently outperforming the frontline indices. During the previous week, the index took decisive support near its 100-day EMA, which acted as a reliable demand zone and triggered a sharp rebound. By Friday, Bank Nifty had registered a weekly gain of nearly 2%, forming a bullish candle with a minor upper shadow, indicating sustained buying interest throughout the week.

What further highlights its strength is the fact that Bank Nifty is now just 1.36% away from its all-time high, while the broader Nifty remains over 4% below its record peak—clearly underscoring the index’s strong relative outperformance. This sentiment is also validated by the ratio chart, which continues to display a healthy pattern of higher tops and higher bottoms against the Nifty.

From a technical standpoint, Bank Nifty is comfortably trading above all its key moving averages, and importantly, these averages are sloping upward, reflecting a firmly bullish structure. This alignment typically signifies strong underlying momentum and a supportive trend backdrop. However, in the short term, momentum indicators are pointing to sideways movement, suggesting that the index may consolidate briefly before attempting the next directional move.

Looking ahead, the zone between 60,000 and 60,100 will act as a critical resistance band for the index. A sustained breakout above 60,100 could open the gates for a sharp upward move, potentially taking the index toward 60,600, followed by 61,200 in the short term.

On the downside, the region between 58,700 and 58,600 will serve as an important support area, and any pullback into this zone is likely to attract fresh buying interest, keeping the broader trend intact.

Which two stocks are on your buy radar for Budget day?

Indus Towers

Indus Towers has staged a sharp rebound after finding support at its 50-day EMA on January 21. Momentum has improved meaningfully, with the RSI rising from 44 to 63 in just five sessions. A bullish DI+ crossover over DI- on the ADX signals improving trend strength. The MACD has also turned positive, crossing above the signal line and holding well above zero.

With prices facing stiff resistance in Rs 445–455 resistance zone since the start of January, the setup suggests a potential breakout and further upside. Hence, we recommend accumulating the stock in the zone of Rs 445-440 with a stop-loss of Rs 430. On the upside, it is likely to test the level of Rs 475 in the short term.

Nestle India

Since early January, Nestle India has been consolidating in the Rs 1,262–1,333 range while repeatedly finding support at its 50-day EMA, highlighting strong buying interest at this level. Momentum has turned favourable with the DI+ crossing above DI- on the ADX, signaling improving bullish trend strength.

The stock has also formed a strong bullish candle backed by a surge in volumes. With the RSI sustaining above 60, price action and momentum indicators point towards continuation of the ongoing up move. Hence, we recommend accumulating the stock in the zone of Rs 1,340-1,330 with a stop-loss of Rs 1,295. On the upside, it is likely to test the level of Rs 1,430 in the short term.

Do you expect the uptrend to continue in Vodafone Idea, Aurobindo Pharma, and Blue Star after the sharp rally?

Vodafone Idea has witnessed profit booking after hitting a high of Rs 12.80 on December 31. The stock corrected towards its 100-day EMA and has shown signs of a bounce from those levels. The DI+ crossing above DI- on the ADX suggests improving bullish strength. As long as the stock holds the Rs 9.5–9.7 support zone, the pullback is likely to remain healthy with scope for continuation.

Aurobindo Pharma briefly slipped below its key short- and long-term moving averages, but a sharp pullback over the last two sessions helped it reclaim these levels swiftly. The broader structure remains sideways, and with the pharma sector underperforming the Nifty, sustained upside may require a decisive breakout above Rs 1,240–1,250 to revive buying interest.

Blue Star has seen a strong bounce from recent lows; however, the lower top - lower bottom structure on the daily chart remains intact. A clear breakout above Rs 1,870–1,880 is needed to negate this pattern; until then, price action may stay choppy.

Do you see a significant breakout of the rounding pattern in City Union Bank?

City Union Bank has taken strong support at its 50-day EMA and rebounded sharply to close near its previous swing high zone of Rs 300–305. It has given a stage-2 cup pattern breakout on a daily scale. The stock continues to form a higher high–higher low structure on the daily chart, keeping the uptrend intact.

Momentum indicators are supportive, with the RSI rising and holding above 60, indicating strengthening bullish momentum. The DI+ crossing above DI- on the ADX suggests improving trend strength, while the MACD moving above the zero and signal lines confirms positive momentum.

Additionally, the City Union Bank/Private Bank ratio chart has given a fresh breakout, highlighting potential relative outperformance of the stock within the sector. Overall, price action and indicators suggest the stock is well-positioned for a breakout and move higher.