Chartist Talk | Sudeep Shah picks 2 largecaps for next week; outlook on 6 stocks after smart gains

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

Sudeep Shah, the Head - Technical and Derivatives Research at SBI Securities, is betting on Lupin and Hindalco Industries for next week. "Lupin continued moving up in a higher-high, higher-low structure, signalling a healthy uptrend along with bullish momentum indicators," he said in an interview with Moneycontrol.

For Hindalco, he believes the technical setup favours continued upward momentum as long as the stock holds above its breakout zone.

The overall chart structure of the Nifty IT index remains bullish as it is quoting above its short and long-term moving averages, said Sudeep Shah, who shares his outlook on CCL Products, New India Assurance, Swiggy, Hindustan Zinc, NALCO, and City Union Bank.

Notably, for the third week in a row, Nifty has printed a candle with a small real body and a pronounced lower shadow — a classic sign of strong buying interest emerging at lower levels.

Currently, the index is trading above both its short- and long-term moving averages, with these averages beginning to slope upward — often an early indication of renewed directional strength. Momentum indicators are also improving, with the daily RSI rebounding sharply from the 44.5 region and now hovering around 54.5, comfortably above its 9-day average. This convergence of trend strength and momentum raises the possibility that the index may be gearing up for its next upside move.

Looking ahead, the 26,150–26,200 zone emerges as an immediate resistance area. A decisive and sustained breakout above 26,200 could pave the way for a quick move toward 26,350, followed by 26,500.

The Bank Nifty underperformed the broader frontline indices last week, ending at 59,390 with a weekly decline of 0.66%. For the second week in a row, the index formed a small-bodied candlestick accompanied by a long lower wick, highlighting buying support at lower levels but an absence of strong bullish follow-through.

During the week, the index hovered around its 20-day EMA, reflecting indecisiveness and subdued momentum. The daily RSI continues to move sideways, suggesting consolidation rather than the emergence of a directional trend.

Looking ahead, the 59,700–59,800 zone is a key resistance area. A sustained breakout above 59,800 could pave the way for a sharp rally toward 60,500, and with continued momentum, even 61,000 in the near term. On the downside, immediate support is placed at 58,800–58,700, and a decisive break below this band could lead to further downside pressure.

Both Hindustan Zinc and NALCO have delivered fresh breakouts above their earlier resistance zones. After a brief phase of profit booking, the metal space is witnessing renewed strength, reflected by a rising ratio line in the Nifty Metal/Nifty ratio chart. The ratio line has taken strong support from its upward-sloping trendline and is moving higher, highlighting renewed sectoral outperformance. These breakouts are backed by a noticeable volume spike, adding credibility to the move.

RSI is in a rising mode signal, strengthening momentum, while the MACD line is well above the zero, and the signal line indicates a strong bullish trend. Widening DI lines suggest expanding trend strength, favouring further upside in the near term.

Lupin has shown strong resilience after taking support near the Rs 1,900 zone and continued moving up in a higher-high, higher-low structure, signalling a healthy uptrend. Over the last three sessions, the stock has consistently defended its 20-day EMA, attracting fresh buying interest and pushing prices higher. The RSI has climbed from 53 to 65, indicating strengthening bullish momentum.

Additionally, DI+ crossing above DI- in the ADX signals growing trend strength in favour of buyers. The MACD line is on the verge of crossing above the signal line, a development that typically indicates a potential bullish acceleration in the short term. Hence, we recommend accumulating the stock in the zone of Rs 2,120-2,100 with a stop-loss of Rs 2,010. On the upside, it is likely to test the level of Rs 2,260 in the short term.

Hindalco has broken out of a tight 11-session consolidation zone of Rs 834-800, closing firmly above the range with healthy volumes, confirming strong breakout conviction. The ratio line in the Nifty Metal/Nifty ratio chart has also rebounded from its upward-sloping trendline, signalling renewed sectoral outperformance. RSI has risen to 68, indicating strong bullish momentum approaching overbought territory but still supportive of the trend.

Meanwhile, the widening DI lines in the ADX suggest increasing trend strength as buying pressure expands and sellers weaken. Overall, the technical setup favours continued upward momentum as long as the stock holds above its breakout zone. Hence, we recommend accumulating the stock in the zone of Rs 855-846 with a stop-loss of Rs 820. On the upside, it is likely to test the level of Rs 910 in the short term.

The overall chart structure of the Nifty IT index remains bullish as it is quoting above its short and long-term moving averages. Most noteworthy, during the last week's correction, the daily RSI has taken support near the 60 mark and thereafter witnessed a rebound, which is a bullish sign as per RSI range shift rules.

Going ahead, the 20-day EMA zone of 37,600-37,500 will act as important support for the index. As long as the index is trading above 37,500, it is likely to continue its northward journey and test the 39,000 level, followed by the 39,500 level in the short term.

CCL Products decisively broke above its 20-DEMA zone of Rs 970–980 after four sessions of consolidation, closing nearly 6% higher on Friday. The stock now trades above key moving averages. RSI rising from 43 to 60 signals improving momentum, while a DI+ crossover over DI? indicates a fresh bullish trend. Sustained strength above current levels may lead to further upside.

On the other hand, New India Assurance has rebounded sharply from the Rs 154 lows over the past four sessions; however, the stock remains in a broader downtrend. While the MACD has turned positive with a signal-line crossover, it is still well below the zero line. Hence, this move appears corrective, and it would be prudent to wait for clearer reversal confirmation.

Swiggy broke out of its Rs 376–411 consolidation range on December 12, supported by a pickup in volumes. RSI rising from oversold levels near 31 to 58 reflects improving momentum. Rising green MACD histogram bars signal strengthening bullish momentum, while a DI+ crossover over DI- indicates trend reversal in favour of buyers. Sustained strength can drive further upside.

On the other hand, City Union Bank has successfully defended its 20-EMA after hovering near it for four sessions, closing decisively higher on December 12. RSI moving from 50 to 58 signals improving bullish momentum. Although DI+ narrowly missed a crossover, widening DI lines suggest short-term strength is intact. The stock remains constructive as long as it holds above its 20-EMA.