Midcap and Smallcap indices are currently in a corrective phase, and their underperformance signals that the Nifty’s rally lacks the broad-based participation that typically defines a strong trend, said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities, in an interview with Moneycontrol.
He noted that this disconnect points to a rally that has yet to earn full conviction. “The next few sessions will be crucial to see whether midcaps and smallcaps stabilize and realign with the Nifty’s uptrend, as their tone often reflects the market’s underlying health,” he said.
Among stocks, he is betting on Eicher Motors and Tata Consumer Products for next week. "The price action and momentum indicators together suggest that Eicher Motors is well-poised for a further up move, while Tata Consumer Products above the midline of the Bollinger Bands showed strengthening price stability," he said.
Do you see the possibility of consolidation in Bank Nifty next week? If yes, would it lead to a retracement toward the 20-day EMA before the index resumes a new leg of the upmove?
Bank Nifty has been the standout performer in recent sessions, consistently outperforming the broader market and scaling new all-time highs for four straight days. This strong stretch highlighted the strength of banking counters and reaffirmed their leadership in the current market uptrend.
But the momentum cooled off on Friday, as profit-taking dragged the index below the 59,000 level. This pullback led to the formation of a Shooting Star candlestick on the weekly chart—a well-known bearish reversal pattern that usually emerges near the top of an uptrend. The long upper wick signals that bulls pushed the index higher initially, but heavy supply at elevated levels limited the upside, suggesting waning buying strength.
On the indicators front, RSI has slipped below its 9-day EMA, with both turning lower. A pronounced bearish divergence on the daily chart further points to the likelihood of a short-term halt in the rally. Taken together, these technical signs indicate that the index may consolidate before making its next upward move.
In the near term, the 58,600–58,500 zone will act as a crucial support band. A breakdown below 58,500 could extend the correction toward 57,700. On the flip side, the 59,200–59,400 zone is the key resistance to watch. A sustained breakout above 59,400 would invalidate the bearish signals and set the stage for the index to resume its upward trajectory.
With the sharp spike in India VIX signalling caution for bulls, do you expect the Nifty 50 to correct toward the 25,850–25,750 zone before regaining strength for a move toward record highs?
Midcap and Smallcap indices — the segments that usually add breadth and momentum to a genuine bull phase — are undergoing a corrective spell. Their underperformance indicates that this rise lacks the broad-based participation that defines a strong trend. It raises a key question: is this truly a robust upmove, or are the front-line numbers masking weakness underneath?
A healthy bull run thrives on collective strength — leaders pulling ahead while the rest follow steadily. But right now, leadership is concentrated in a few large-caps, while many other stocks are still trying to find a base. This disconnect suggests a rally that’s yet to earn full conviction. The next few sessions will be telling, especially to see if Midcaps and Smallcaps stabilize and reconnect with the uptrend, as their tone often determines the market’s real health.
In the short term, support for Nifty lies in the 25,900–25,850 zone. As long as the index holds above 25,850, the upward trajectory is likely to extend toward 26,300 and then 26,500. To sum up, the charts may be celebrating near the highs, but the broader market’s behaviour in the coming days will reveal whether this rally gains true strength — or remains a selective rise dressed as a bull run.
Are you bullish on Max Healthcare Institute?
Max Healthcare has taken strong support twice from the Rs 1,060–1,070 zone since early October, a level that also aligns with the lower Bollinger Band, indicating robust demand. The RSI is trending higher and is now just tad below 60, signalling improving positive momentum. The price is trading above all key moving averages, reinforcing the bullish structure.
Additionally, the MACD has given a bullish crossover, and the ADX is gradually rising, showing strengthening trend intensity. With multiple technical factors aligning, the stock is well-positioned to extend its upward move, and the overall setup favours a continuation of the existing uptrend.
What is your view on Infosys and the Nifty IT index?
Infosys has been in a steady higher-high, higher-low formation since the low of Rs 1,414 seen on August 7. It now trades just 1.3% below its 200-day EMA and is nearing a downward-sloping trendline breakout. The MACD slope turning upward reflects strengthening bullish momentum. A strong close above the 200-day EMA can open the doors for a fresh rally.
The Nifty IT index also closed above its 200-day EMA for the first time since July, with RSI above 60 and MACD firmly positive. While the index has failed to sustain earlier rebounds, a decisive follow-through above the 200-day EMA can trigger a new up move.
Which two stocks would you prefer to buy for next week?
Eicher Motors delivered a downward sloping trendline breakout on November 20, supported by rising volumes, signalling strong buyer participation. The stock also closed above the 20-day EMA, followed by mild continuation buying on Friday. The RSI has climbed sharply from 39 to 63, reflecting improving bullish momentum.
In the ADX, the +DI crossing above –DI indicates that buyers are regaining control. Additionally, the MACD line has crossed above both the signal line and the zero line, reinforcing upward momentum. Overall, the price action and momentum indicators together suggest that the stock is well-poised for a further up move. Hence, we recommend accumulating the stock in the zone of Rs 7,140-7,080 with a stop-loss of Rs 6,800. On the upside, it is likely to test the level of Rs 7,630 in the short term.
Tata Consumer broke out of a downward sloping trendline in the Rs 1,135–1,145 zone on October 17. Since the breakout, the stock has traded sideways, facing resistance at Rs 1,200–1,205, while the earlier breakout zone of Rs 1,135–1,145 has consistently acted as a strong demand area, with multiple retests leading to upward bounces. During this consolidation, volumes have steadily risen, indicating quiet accumulation.
The price has also closed above the midline of the Bollinger Bands, reflecting strengthening price stability. The RSI has moved up from 49 to 57, signalling improving bullish momentum, while the MACD is nearing a bullish crossover, suggesting a potential upside shift. Hence, we recommend accumulating the stock in the zone of Rs 1,185-1,175 with a stop-loss of Rs 1,145. On the upside, it is likely to test the level of Rs 1,265 in the short term.
Are you a strong buyer in Federal Bank, which gained nearly 4 percent?
Federal Bank had been consolidating in a narrow Rs 239–232 range since early November before giving a breakout on November 18, supported by a sharp volume surge, indicating strong buying interest. After the breakout, the stock has moved sideways for three sessions, suggesting a healthy pause.
RSI and ADX have flattened after a strong up move, signalling consolidation rather than weakness. Structure remains positive as long as the stock holds above the breakout zone. A sustained move above Rs 250 with accompanying volumes can reignite momentum and lead to the next leg of upside.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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