According to Sudeep Shah of SBI Securities, technical structure indicates that the upside momentum is losing steam, and Nifty is likely to enter a consolidation phase in the coming sessions as the market digests recent gains.
In the case of Bank Nifty, he believes the presence of strong support levels and overall positive structure suggests that the index is unlikely to undergo a deep correction in the immediate term.
Meanwhile, the FII data points toward a constructive yet balanced approach, where buying interest in cash markets is complemented by a guarded view in futures, indicating optimism with a layer of prudence, said the Deputy Vice President and Head of Technical and Derivative Research at SBI Securities in an interview with Moneycontrol.
He picks Mphasis and Grasim Industries for next week.
Do you think the Nifty has made a short-term top and will consolidate for a couple of weeks before finding a firm direction?
The benchmark index, Nifty, extended its upside journey this week (ended April 25), continuing the sharp rally that began from the low of 21,743.65. Over the course of just 12 trading sessions, the index surged more than 2,600 points, reflecting strong bullish momentum. However, this rally hit a brief pause amid anticipated geopolitical tensions between India and Pakistan, triggering a minor throwback.
Notably, the throwback was arrested near a key technical support — the neckline of a double bottom pattern, which coincides with the 8-day EMA. This level acted as a cushion, helping the index recover slightly before eventually closing the week at 24,039, registering a modest gain of 0.79 percent. On the weekly chart, Nifty has formed a small-bodied candle with a long upper shadow, a classic indication of selling pressure at higher levels. While the index remains above its short and long-term moving averages, it’s important to note that the slope of short-term averages is flattening, hinting at waning momentum.
From an indicator perspective, the daily RSI (Relative Strength Index) remains in bullish territory, though it has started to trend lower, while the MACD (Moving Average Convergence Divergence) histogram has declined for the last two sessions, both suggesting fading bullish strength. Overall, the technical structure indicates that the upside momentum is losing steam, and Nifty is likely to enter a consolidation phase in the coming sessions as the market digests recent gains.
Talking about crucial levels, the zone of 24,350-24,380 will act as a crucial hurdle for the index. If the index sustains above 24,380 levels, then we may witness a sharp upside rally up to the level of 24,600, followed by the 24,850 level in the short term. On the downside, the zone of 23,800-23,750 will act as important support for the index as the 23.6 percent Fibonacci retracement level of its prior upward move (21,744-24,365) is placed in that region. If the index slips below 23,750 levels, then the next crucial support is placed at the 23,350 levels.
How are the FIIs positioning themselves after the recent rally?
Over the last eight consecutive trading sessions, FIIs have emerged as net buyers in the Indian equity markets, signaling renewed confidence in domestic fundamentals. This buying spree reflects positive sentiment towards Indian equities.
In the derivatives segment, the FII long-short ratio in index futures currently stands at 37.63 percent, suggesting a moderately cautious stance. While it’s not overly bullish, it indicates a gradual unwinding of short positions and buildup of long positions — a sign that FIIs are selectively participating in the uptrend but are still hedging against near-term volatility.
Overall, the FII data points toward a constructive yet balanced approach, where buying interest in cash markets is complemented by a guarded view in futures, indicating optimism with a layer of prudence.
What are your top two stock picks for the coming week?
The Nifty IT has witnessed a strong rebound last week. It has strongly outperformed frontline indices. The stock has surged above its short-term moving averages, i.e., 20 and 50-day EMA (Exponential Moving Average) levels. These averages are starting to edge higher, which is a bullish sign. Further, the daily RSI has surged above the 60 mark, and it is on a rising trajectory. Hence, we believe the stock is likely to continue its northward journey and test the level of Rs 2,800 in the short term. On the downside, the zone of Rs 2,420-2,400 is likely to provide the cushion in case of any immediate decline.
The stock is in an uptrend as it marks the sequence of higher tops and higher bottoms. Also, it is trading above its short and long-term moving averages. Most noteworthy, recently, the daily RSI took support near the 60 level and witnessed a rebound, which is a bullish sign as per RSI range shift rules. Hence, we recommend accumulating the stock in the zone of Rs 2,740-2,720 level with a stop-loss of Rs 2,640. On the upside, it is likely to test the level of Rs 2,900 in the short term.
Are you bullish on UltraTech Cement and ICICI Bank?
The stock is in a strong uptrend as it marks the sequence of higher tops and higher bottoms. Also, it is trading above its short and long-term moving averages. The daily RSI is in a bullish zone, and it is rising mode, which is a bullish sign. Hence, we believe the stock is likely to continue its northward journey in the short term.
After registering a high of Rs 1,436, the stock has witnessed a throwback. The throwback was halted near the 23.6 percent Fibonacci retracement level of its prior upward rally (Rs 1,265-Rs 1,436), and it coincides with the 20-day EMA level. Currently, the stock is trading above its short and long-term moving averages, which is a bullish sign. The daily RSI is in bullish territory. Going ahead, any sustainable move above the level of Rs 1420 will lead to resume its northward journey.
Do you expect a major breakout in the Nifty FMCG index in May?
No, a major breakout in the Nifty FMCG index is unlikely in May, as the weekly chart suggests a short-term consolidation phase. The index is expected to remain rangebound between 55,500 and 58,100. A decisive breakout or breakdown beyond this range could trigger a strong trending move in either direction.
Are technical indicators suggesting that the Nifty Bank may not undergo a major correction despite near-term consolidation?
Yes, technical indicators currently point towards a phase of consolidation rather than a major correction for Nifty Bank. The banking benchmark index has outperformed frontline indices in recent sessions and even registered a fresh all-time high of 56,098.70 during the first half of last week. Although the index witnessed a throwback after its peak, it managed to find support at the 8-day EMA, a sign of underlying strength.
On the weekly chart, a small-bodied candle with both upper and lower shadows suggests some indecision at elevated levels, calling for near-term caution. However, the broader structure remains intact, with the index trading well above both its short and long-term moving averages — a distinctly bullish signal.
While the daily RSI remains in the bullish zone, it is showing signs of easing, hinting at a possible pause or consolidation following the recent rally. Still, the presence of strong support levels and overall positive structure suggests that the index is unlikely to undergo a deep correction in the immediate term.
Talking about crucial levels, the zone of 54,200-54,100 will act as immediate support for the index. Any sustainable move below the level of 54,100 will lead to further correction up to the level of 53,400. While on the upside, the zone of 55,500-55,600 will act as a crucial hurdle for the index. Any sustainable move above the level of 55,600 will lead to resuming its northward journey. In that case, the index is likely to test the level of 56,300, followed by 57,000 in the short term.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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