After last week's rally, Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities, said any sustainable move higher in Nifty 50 would depend on consistent buying interest, wider market participation, and strengthening trends across sectors.
"Until these conditions align, a cautious and selective approach remains advisable."
The recovery last week lacked broad support. Currently, 28 out of the 50 Nifty stocks are still below their 50-day EMA, highlighting the absence of collective strength in this upmove, he said in an interview to Moneycontrol.
Sudeep Shah is bullish on four stocks - Eternal, Muthoot Finance, UNO Minda, and HDFC Life Insurance - for next week. "Eternal and Muthoot Finance, both have given a strong breakout, backed by robust volume expansion, which adds credibility to the move," he said.
With the market snapping a six-week losing streak, can we say the bulls are back on the Street?
This Independence week (ended August 14), the benchmark index Nifty finally broke its six-week losing streak, rising 1.10 percent and reclaiming the 24,600 level. Echoing the spirit of the nation’s hard-won freedom, this rebound brought much-needed relief after a prolonged stretch of weakness. However, the last two sessions saw the index move within a narrow range, forming small-bodied candles, signaling that a decisive escape from bearish pressure is still pending.
Technically, Nifty continues to trade below its 20-day and 50-day EMAs, both of which are trending lower — a sign that medium-term weakness remains intact. Momentum indicators offer little clarity: the daily RSI is moving sideways, suggesting indecision, while the MACD histogram remains below both the zero line and signal line, keeping sentiment cautious.
Beneath the surface, the recovery lacks broad support. Currently, 28 out of the 50 Nifty stocks are still below their 50-day EMA, indicating a lack of collective strength in this upmove.
For the rally to gain meaningful traction — akin to the unity that defined India's freedom struggle — Nifty must break above the 24,750–24,800 resistance zone. A sustained move beyond 24,800 could pave the way toward 25,100. On the downside, 24,470–24,450 remains a key support area. A decisive breach below 24,450 could drag the index lower to 24,250, and possibly to 24,100.
Until broader participation emerges, this rally remains incomplete — a movement still seeking full market liberation.
Do we see a Tweezer Bottom formation on the weekly charts of the Nifty 50 and Bank Nifty? If yes, and if the upcoming week offers confirmation, do you expect the bulls to drive Nifty 50 and Bank Nifty toward a record high this time?
On the weekly charts, both Nifty 50 and Bank Nifty have formed a candlestick pattern resembling a Tweezer Bottom — a potential indicator of a reversal from a downtrend. However, it's crucial to emphasize that this pattern remains unconfirmed. For confirmation, a strong bullish follow-through is needed in the coming week, ideally with a decisive close above the high of the Tweezer Bottom candles, supported by improving market breadth.
Even if such confirmation materializes, anticipating a quick surge toward record highs may be overly optimistic. The broader market continues to show signs of fragility — with weak internal indicators including narrow market breadth, limited sectoral participation, and momentum oscillators that lack conviction. Both indices are still trading below key moving averages, and several sectors remain under pressure.
In summary, while the Tweezer Bottom formation provides a technical base for a potential rebound, any sustainable move higher will depend on consistent buying interest, wider market participation, and strengthening trends across sectors. Until these conditions align, a cautious and selective approach remains advisable.
What does the FIIs' long-short ratio indicate about the further market direction?
The Foreign Institutional Investors’ (FIIs) long-short ratio in index futures currently stands at just 8.30 percent, reflecting a heavily skewed bearish positioning — with 91.7 percent of their index futures positions on the short side and only 8.3 percent on the long side. This ratio has remained below the 10 percent threshold for 11 consecutive sessions, dipping to a low of 7.95 percent on August 12 — the lowest level in this stretch.
The last time we saw similar levels was in March 2023, when the ratio hovered around 8.6 percent, 8.4 percent, and 7.75 percent between March 20–22, with 7.75 percent being the lowest on March 22. Notably, during that period, Nifty bottomed at 16,828 on March 20, and what followed was a robust rally — delivering returns of 3.74 percent in one month, 10.76 percent over three months, and 17.15 percent in six months.
Historically, such extreme bearish FII positioning has often preceded sharp short-covering rallies. This time, a potential catalyst could be progress in US–India trade negotiations or signs of rupee strength. As long as the dollar continues to appreciate — up 2 percent against the rupee since early July — FIIs are likely to remain cautious.
What insights do the options data and Put-Call Ratio (PCR) provide regarding the near-term market trend?
Current options data and the Put-Call Ratio (PCR) suggest that the market is likely to remain in a short-term consolidation phase. The PCR, fluctuating between 0.78 and 1.08, reflects a neutral sentiment, with no signs of excessive bullish or bearish positioning.
Strong Put writing at the 24,600 and 24,500 strike levels signals firm support zones, while notable Call writing at 24,700 and 24,800 indicates resistance in the near term. A decisive move below 24,450 could pull the index down toward the 24,300–24,250 area. Conversely, a sustained breakout above 24,800 may open the door for a move toward 25,000–25,050.
Until a clear breakout or breakdown materializes, the Nifty 50 is expected to remain range-bound between 24,450 and 24,750. Meanwhile, implied volatility holding steady around the 10 mark suggests calm market conditions and reinforces the outlook for a stable, sideways trend in the immediate term.
Are you bullish on Eternal and Muthoot Finance, both of which posted a healthy rally in the past week?
Yes, we maintain a bullish view on both Eternal and Muthoot Finance, based on their recent price action and technical setup. On the weekly charts, both stocks have given a strong breakout, backed by robust volume expansion, which adds credibility to the move. Importantly, these breakouts have occurred at or near all-time highs, indicating strong demand and investor confidence.
From a technical perspective, all key moving averages are aligned positively, and momentum indicators such as RSI and MACD are showing strength, confirming the bullish undertone. Given the combination of price breakout, volume confirmation, and momentum alignment, the setup favours further upside in the near to medium term.
What are your top two stock picks for the upcoming week?
The stock has witnessed a breakout above a downward-sloping trendline on the daily chart, accompanied by strong volume exceeding the 50-day average, confirming the validity of the breakout. The formation of a sizeable bullish candle on the breakout day adds further strength to the move. The stock is currently trading above its short and long-term moving averages, which are trending higher and aligned in the desired sequence—indicating a strong underlying trend.
Momentum indicators are also supportive, with the daily RSI surging past the 60 mark and remaining in an upward trajectory. Although the ADX is currently at 15, suggesting that trend strength is still developing, the directional indicators are already in buy mode, reinforcing the bullish setup. Hence, we recommend accumulating the stock in the zone of Rs 1,155-1,145 with a stop-loss of Rs 1,100 on the upside, it is likely to test the level of Rs 1,270 in the short term.
The stock has recently broken out above the neckline of an Adam and Adam Double Bottom pattern on the daily chart, signalling a bullish reversal. This breakout is supported by a rising ADX, which has crossed above the -DI line, confirming directional strength. The stock is trading approximately 6 percent above its 100-day EMA and nearly 11 percent above its 200-day EMA, reflecting strong momentum. Additionally, the daily RSI is in bullish territory and continues to rise, further validating the positive price action. Hence, we recommend accumulating the stock in the zone of Rs 790-780 with a stop-loss of Rs 750 on the upside; it is likely to test the level of Rs 860 in the short term.
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