Chartist Talks: SBI Securities' Sudeep Shah bullish on these 6 stocks, but recommends avoiding fresh position in defence sector

"A weekend can change more than just calendars—it can reshape market psychology." Last Friday, i.e. May 09, Indian markets were gripped by anxiety as tensions between India and Pakistan escalated, casting a shadow of uncertainty over investor confidence. However, over the weekend, a remarkable shift unfolded. The mood in the Indian financial landscape has turned decisively upbeat, buoyed by a confluence of calming geopolitical signals, encouraging economic indicators, and robust corporate developments. Together, these factors have not only altered investor sentiment but have also injected a fresh wave of optimism and confidence into the system.

The Indian equity market showcased this transformation in full force, as the benchmark Nifty closed the week (ended May 16) above the psychological 25,000 mark, posting an impressive gain of over 4 percent. What truly stood out was the powerful outperformance in the broader markets. The Nifty Midcap 100 surged by more than 7 percent, while the Nifty Smallcap 100 rocketed over 9 percent—its strongest weekly gain since June 2020.

This broad-based rally reflects a deepening bullish sentiment and growing investor confidence beyond the headline index. Sectoral rotation played a key role, with strong traction in Defence, Railways, Metal, and IT stocks, further underlining the healthy participation from multiple corners of the market.

From a technical standpoint, the current chart structure suggests that the bullish momentum is likely to extend into the coming week. We expect Nifty to move toward 25,300 in the short term, with the potential to stretch further toward 25,600. On the downside, the zone of 24,750-24,700 is likely to provide a cushion in case of any immediate decline.

The swift change in sentiment has opened the door for renewed momentum and fresh opportunities. With strong sectoral participation and a clear upward trajectory, the market appears poised to build on this rally, backed by both technical strength and improving risk appetite.

How are FIIs currently positioned in the market?

In the last two trading sessions, the FIIs have aggressively purchased shares in the cash market to the tune of nearly Rs 14,,100 crore. This kind of aggressive buying has not been seen in the cash market since quite some time. In the index futures segment, after the long short ratio hit 50 percent on May 12, FIIs created short positions, which brought down the ratio to 38 percent on May 13.

However, the FIIs didn't continue to build more shorts, rather covered some short positions in the next few days with the long short ratio standing at 42 percent. Falling yields on US 10Y government bonds, fall in the DXY (dollar index), and the steady strengthening of rupee have led to aggressive inflows by FIIs in recent times.

Do you expect the Bank Nifty index to hit a new record high in May series?

Since April 23, 2025, the banking benchmark index, Bank Nifty, has been underperforming the broader Nifty index. This is evident from the ratio chart, which has been forming lower lows relative to Nifty, indicating continued relative weakness. Despite this, the major trend of the index remains bullish as it is quoting above its short and long-term moving averages. The daily RSI (Relative Strength Index) is in bullish territory. From a price action perspective, the index is forming a stage-2 cup pattern on a daily scale.

Going ahead, the zone of 55,700-55,800 will act as a crucial hurdle for the index. Any sustainable move above the level of 55,800 will lead to a sharp upside rally upto the level of 56,700, followed by the 57,500 levels. On the downside, the zone of 54,800-54,700 is likely to act as immediate support for the index.

Are the charts of Titagarh Rail Systems and Angel One looking strong? Would you recommend taking exposure to both at this stage?

Yes, both Titagarh Rail Systems and Angel One are exhibiting strong chart structures. They are trading well above their short and long-term moving averages, indicating a sustained uptrend. Additionally, momentum indicators and oscillators are reinforcing the bullish sentiment, suggesting continued strength. Given this setup, we believe both stocks are well-positioned to extend their outperformance in the near term, and exposure at current levels can be considered with appropriate risk management.

What are your top two stock picks for the upcoming week?

Gujarat Mineral Development Corporation

GMDC has given a horizontal trendline breakout on a daily scale. This breakout is confirmed by robust volume. In addition, it has formed a sizeable bullish candle on a breakout day, which adds strength to the breakout. Currently, it is trading above its short and long-term moving averages. Further, the daily RSI is in bullish territory, and it is in rising mode. Hence, we recommend accumulating the stock in the zone of Rs 355-351 levels with a stop-loss of Rs 340 level. On the upside, it is likely to test the level of Rs 380, followed by Rs 400 in the short term.

Rail Vikas Nigam

Rail Vikas Nigam has given a consolidation breakout on a daily scale along with a robust volume. Further, it has surged above its 100 and 200-day EMA level. The daily RSI is surged above 60 mark, and it is in rising trajectory. The MACD histogram is suggesting pickup in upside momentum. Hence, we recommend accumulating the stock in the zone of Rs 410-405 level with a stop-loss of Rs 390 level. On the upside, it is likely to test the level of Rs 440, followed by Rs 450 in the short term.

Do you see a strong trendline breakout in IRFC (Indian Railway Finance Corporation) and SJVN?

Yes, both the stocks have given a trendline breakout on a daily scale. Most noteworthy, this breakout is along with robust volume. Also, both stocks have surged above their 200-day EMA level on Friday. The momentum indicators and oscillators are also suggesting strong bullish momentum in this stock. Hence, we believe they are likely to continue their outperformance in the short term.

Are you strongly bullish on defence stocks at current levels?

In line with our expectations, the Nifty India Defence has strongly outperformed frontline indices as it has surged by over 17 percent in the last week. However, as per the RSI range shift rules, the index is in overbought condition. Hence, we recommend avoiding building a fresh position in the defence space as the risk-reward will not be favourable at current levels.

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