Chartist Talks: SBI Securities' Sudeep Shah advises caution, picks these 2 bluechips

Despite ongoing geopolitical tensions between India and Pakistan, the benchmark Nifty index managed to limit its losses, ending the week lower by just over 1%. However, it is important to note that the index continues to trade comfortably above its medium and long-term moving averages, indicating that the broader trend remains intact for now. However, the momentum indicators and oscillators portray a sideways picture. Now, the million-dollar question is, what’s next in this uncertain time?

To offer some perspective, we have analysed data from the last three major geopolitical incidents between India and Pakistan — the Kargil War, the LOC strike after the Uri attack, and the Balakot strike following the Pulwama attack.

• During the Kargil War, Nifty initially experienced high volatility but then staged a sharp rally, surging nearly 36% during the conflict.
• Post the Balakot strike, the index delivered a strong return of over 10% in the 90 days that followed.
• The Uri strike was an exception, as Nifty declined by more than 8% in the subsequent 90 days. It’s worth noting that this period also coincided with the announcement of demonetization, which weighed heavily on market sentiment.

The historical pattern suggests that while initial volatility is common during such geopolitical events, the index has, in most cases, regained upside momentum once the dust settles. Also, we would like to highlight that the current major trend of the index is still sideways to bullish. However, we recommend adopting a cautious stance for the next couple of days.

Talking about crucial levels, the zone of 23,850-23,800 will act as a crucial support for the index. If the index slips below the level of 23,800, then the 100-day EMA zone of 23,560-23,500 will act as the next crucial support for the index. On the upside, the zone of 24,250-24,300 will act as a crucial hurdle for the index.

How are FIIs and DIIs positioning themselves in the current war-like environment?

In the past few trading sessions, FIIs turned net buyers in the cash market, signaling renewed interest. However, it’s worth noting that following Thursday night's escalation between India and Pakistan, FIIs turned sellers on Friday, offloading equities worth Rs 3,798.71 crore.

In the derivatives segment, their positioning also saw a shift. The FII long-short ratio in index futures had climbed to 52% on Thursday, which was the highest level since the first week of October 2024, hinting at growing bullish bets. But by Friday, this ratio slipped back to 47.71%, reflecting a more cautious stance.

Clearly, while FIIs have shown buying interest, the sudden geopolitical flare-up has made them tread carefully, indicating that sustained flows will depend on how the situation unfolds.

Do you expect the Bank Nifty to strongly defend the 50% Fibonacci retracement level from the April low to the recent high? What are the key levels to watch next week?

After two weeks of consolidation, the banking benchmark index, Bank Nifty, has witnessed a consolidation breakdown and ended the week with a loss of over 2.50%. It has strongly underperformed frontline indices. The ratio chart of the index as compared to Nifty is marking the sequence of lower tops and lower bottoms.

Also, the index has slipped below its 20-day EMA level for the first time since April 11. The daily RSI is in the sideways zone, and it is in falling mode. This chart structure indicates consolidation along with a bearish bias in the short term.

Talking about crucial levels, the zone of 53,400-53,300 will act as immediate support for the index as the 38.2% Fibonacci retracement level of its prior upward rally (49,157-56,099) is placed in that region. If the index slips below the level of 53,300, then the next crucial support is placed at 52,600 level. On the upside, the zone of 54,100-54,200 will act as an immediate hurdle for the index.

What are your top two stock picks for next week?

Larsen & Toubro

After the better-than-expected numbers, the stock of Larsen & Toubro has witnessed a consolidation breakout on a daily scale, and it is on the verge of giving a downward sloping trendline breakout. The trendline is formed by connecting swing highs from February 2025. Along with this, the stock has surged above its short and long-term moving averages. The daily RSI is surged above the 60 mark for the first time since March 2025. Hence, we recommend accumulating the stock in the zone of Rs 3,450-3,430 level with a stop-loss of Rs 3,350. On the upside, it is likely to test the level of Rs 3,650 in the short term.

Titan Company

The stock has given a breakout of the falling channel on Friday. This breakout is confirmed by robust volume. In addition, it has formed a sizeable bullish candle, which adds strength to the breakout. Also, it has strongly outperformed frontline indices. Further, all the moving averages and momentum-based indicators suggest strong bullish momentum in the stock. Hence, we recommend accumulating the stock in the zone of Rs 3,520-3,500 level with a stop-loss of Rs 3,400. On the upside, it is likely to test the level of Rs 3,750 in the short term.

Do you expect a pickup in momentum in Tata Motors, and Ideaforge Technology?

Both Tata Motors and Ideaforge Technology are exhibiting strong bullish momentum. On Friday, both stocks surged above their 100-day EMA levels, a positive technical signal. Additionally, their 20 and 50-day EMAs have started to slope upwards, indicating strengthening trend dynamics. Momentum indicators and oscillators are also pointing towards continued bullishness. Hence, we believe these stocks are well-positioned to extend their outperformance in the short term.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.