Chartist Talk: Sudeep Shah shares 2 buy and 2 sell picks amid market caution; Nifty at risk below 24,400

Do you see the Nifty easily breaking below its 200-day EMA in the coming week?

The benchmark index Nifty wrapped up its fifth consecutive week in the red — its longest losing streak since August 2023, raising eyebrows across the street. What adds to the concern is the back-to-back formation of bearish candles with long upper shadows on the weekly chart. This pattern is a classic sign of rejection at higher levels. Despite making multiple attempts to scale up, the index has struggled to hold ground, only to be met with selling pressure each time. The long upper wicks are a telling story — bulls tried, but bears had the final say. It reflects a market that’s finding it hard to build on gains, weighed down by renewed supply pressure, and a cautious sentiment hovering overhead.

Several factors have contributed to this shift in tone — from renewed concerns around the progress of India–US trade negotiations, to persistent FII outflows, and a string of underwhelming corporate earnings that failed to meet market expectations.

The broader markets weren’t spared either. Both the Nifty Midcap and Nifty Small Cap 100 indices came under notable selling pressure and have now underperformed the frontline index for the second consecutive week. Adding to the concern, the ratio charts comparing these broader indices to the Nifty have slipped to their lowest levels in nearly two months, pointing to deteriorating relative strength and increasing caution among market participants when it comes to mid and small-cap exposures.

Technically, Nifty is now trading below its 20-day, 50-day, and even 100-day EMA — a sign of mounting weakness. The daily RSI has dipped below the 40 mark and continues to trend lower, reinforcing the underlying bearish momentum. Talking about key levels, the zone of 24,400–24,350 is expected to act as an immediate support for Nifty. A sustained break below this could further accelerate the downside. On the flip side, the 50-day EMA zone of 24,900–24,950 now stands as a crucial hurdle, and any meaningful recovery would need to clear this zone with conviction.

Looking at the medium-term structure, the 24,000–23,900 zone holds even greater significance. This area is likely to serve as a vital support base, and any breach below it could lead to a deeper corrective phase in the index.

Despite its recent outperformance relative to the Nifty 50, do you expect the Bank Nifty to extend its downtrend and test the June lows as well as the 100-day EMA?

The banking benchmark index, Bank Nifty, traded within a narrow range of 2,081 points during July — its tightest monthly range since July 2023. After posting gains for four consecutive months, the index finally snapped its winning streak and closed the July month on a negative note. On the monthly chart, Bank Nifty has formed a bearish candle, indicating a loss of momentum and a potential pause in the prevailing uptrend.

At present, the index is trading below both its 20-day and 50-day exponential moving averages, with both averages exhibiting a downward slope — a sign of prevailing weakness. Additionally, the daily Relative Strength Index (RSI) has slipped below the 40 mark and continues to trend lower, reflecting fading momentum and increasing bearish pressure. The daily MACD stays bearish as it is quoting below its zero line and signal line. The MACD histogram is suggesting a pickup in downside momentum.

Going ahead, the zone of 55,200-55,100 will act as an important support for the index. If the index slips below the 55,100 level, then the next crucial support is placed at the 54,600 level. On the upside, the zone of 56,300-56,400 will act as an immediate hurdle for the index.

Do you anticipate the rally in Suzlon Energy and Kaynes Technology India to continue in the coming week?

Yes, based on the recent price action and technical indicators, the rally in both Suzlon Energy and Kaynes Technology India appears poised to extend into the coming week. During the previous week, both stocks took strong support near their respective 200-day EMA — a key long-term trend indicator closely tracked by market participants. This support acted as a springboard for a sharp and decisive rebound.

What adds conviction to this recovery is the surge in trading volumes, which confirms that the rebound is backed by strong market participation and not merely a technical pullback. Moreover, both counters are now trading comfortably above their key short and medium-term moving averages, reinforcing the strength of the ongoing uptrend.

In addition, momentum indicators such as the RSI and MACD are showing signs of continued bullish traction, indicating sustained buying interest. Given these favourable technical signals, we expect both Suzlon Energy and Kaynes Technology India to maintain their positive momentum and continue to outperform in the short term, provided broader market conditions remain stable.

Which two stocks would you prefer to bet on for the upcoming week?

Emami

The Nifty FMCG has strongly outperformed frontline indices in the last week. The stock of Emami has found strong support near its upward-sloping trendline, which has been intact since April 2023 by connecting key swing lows. Following this retest, the stock witnessed a sharp upside rally, indicating a solid reversal from the support zone — a move that was further validated by robust volume participation, adding strength to the price action.

With this upmove, the stock has managed to reclaim both its short-term and long-term moving averages, reinforcing the positive shift in momentum. Additionally, the daily RSI has surged past the 60 mark and is trending higher, signaling growing bullish strength and increasing buying interest. Hence, we recommend accumulating the stock in the zone of Rs 620-615 level with a stop-loss of Rs 595 level. On the upside, it is likely to test the level of Rs 660 in the short term.

Jindal Stainless

On Friday, the stock gave a Symmetrical Triangle breakout on the daily scale. This breakout is confirmed by robust volume. Currently, the stock is trading above its short and long-term moving averages. These averages are in rising mode, and they are in the desired sequence, which reinforces the strength of the ongoing trend.

The daily RSI has surged above the 60 mark, and it is in rising mode, suggesting sustained momentum and increasing bullish sentiment. Hence, we recommend accumulating the stock in the zone of Rs 710-700 level with a stop-loss of Rs 680 level. On the upside, it is likely to test the level of Rs 760 in the short term.

Are you particularly bullish on GE Vernova T&D and Radico Khaitan, given their continued higher highs and higher low formation? What are your price targets for both in August?

GE Vernova T&D

While GE Vernova T&D has displayed remarkable strength in recent sessions, locking in upper circuits for the past three consecutive trading days. Going ahead, it is important to exercise caution at this juncture. The stock has already witnessed a steep vertical rally, and its daily RSI is now approaching the overbought territory, indicating stretched short-term momentum. In such scenarios, the risk-reward becomes unfavourable for fresh entries. Hence, we advise avoiding any immediate exposure to the stock until it cools off or offers a healthy consolidation.

Radico Khaitan

Radico Khaitan has shown encouraging technical strength by breaking out of a consolidation pattern on the daily chart in Friday’s session. The breakout was supported by decent volumes, which is a positive sign. However, after touching an intraday high of Rs 2,940, the stock faced some profit booking, ultimately forming a bullish candle with a long upper shadow. This suggests selling pressure at higher levels.

For the stock to resume its upward trajectory convincingly, it must sustain above Rs 2,900 mark. If that level is reclaimed and held, we expect Radico Khaitan to potentially move towards Rs 3,025–3,075 in August, provided market sentiment remains supportive.

Considering the current market weakness, are there any two stocks you'd look to short in the coming week, and what’s your rationale?

Aurobindo Pharma

The stock has strongly underperformed the Nifty Pharma index in the last couple of months. On Friday, the stock has given an upward sloping trendline breakdown on a daily scale. This breakdown is confirmed by robust volume. Also, it is trading below its crucial moving averages. The daily RSI has given a breakdown of upward sloping trendline. Hence, we believe the stock is likely to continue its southward journey and test the level of Rs 1,000 in the short term.

Tata Steel

The stock has slipped below its 100-day EMA level on Friday, which is a bearish sign. In the recent pullback, the daily RSI has failed to cross 60 mark and thereafter slipped below 40 mark, which is a bearish sign as per RSI range shift rules. The daily MACD histogram is suggesting pickup in downside momentum. Hence, we believe it is likely to continue its southward journey and test the level of 145 in the short term.

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