Going ahead, Sudeep Shah of SBI Securities believes the Nifty 50 is well poised to test 25,200, followed by 25,500 in the short term, as all the moving averages and momentum-based indicators suggest strong bullish momentum in the index.
Further, as per the measured rule of cup pattern, according to him, the upside target for Bank Nifty is placed at the 58,700 level, signalling a 3.75 percent rally from here on.
Among stocks, he is bullish on Poonawalla Fincorp, Arkade Developers, HDFC Bank, and Bajaj Finance. "Poonawalla Fincorp has given a horizontal trendline breakout on the daily scale, accompanied by robust volume, while both HDFC Bank and Bajaj Finance have given trendline breakouts on the daily chart, indicating a shift in momentum," said the Deputy Vice President and Head of Technical and Derivative Research at SBI Securities.
Do you think the falling resistance trendline breakout is sustainable in the Nifty 50 in the coming weeks?
"The best trades often come wrapped in surprise announcements and clean technical setups." That’s exactly what played out this week (ending June 6), as the Reserve Bank of India delivered a 50-basis-point rate cut — a move that not only surprised the Street but also acted as a powerful technical trigger across the market. Bank Nifty, which had been moving in a narrow consolidation band (Stage-2 Cup pattern) for over 31 sessions, broke out with conviction, backed by strong momentum. This was not surprising for us, as we had been consistently highlighting that Bank Nifty was gearing up for a breakout. Nifty, too, rebounded from the lower end of its consolidation range and is now on the verge of a decisive breakout, indicating a potential shift in market structure.
Adding further fuel to the bullish sentiment, the volatility index India VIX ended on a negative note for the second consecutive week. This week alone, it tumbled by 9 percent, signaling cooling market nerves and growing risk appetite among participants. Historically, a falling VIX, combined with price and volume breakouts, reinforces the sustainability of an uptrend — precisely the kind of technical environment we're witnessing now.
The Nifty closed the week near the psychological 25,000 mark. On the weekly chart, it formed a bullish candle with a noticeable lower shadow — a classic sign of buying interest at lower levels. Momentum indicators remain supportive, with all key moving average setups aligning in favour of the bulls. Most notably, the daily RSI (Relative Strength Index) has surged past the 60 mark and continues to rise, further affirming bullish strength.
Going ahead, we believe the index is well poised to test 25,200, followed by 25,500 in the short term. On the downside, the zone of 24,750–24,700 is likely to act as a strong support in case of any immediate pullback.
How are the FIIs positioning now, especially after Friday's move?
FII activity is currently showing mixed signals. While they were net buyers in equities during March, April, and May, they have turned net sellers so far in June. This indicates some hesitation or profit-booking amid global uncertainties or reallocation.
However, in the derivatives segment, the FII long-short ratio stands at just 20.87 percent, reflecting a heavy short bias. This suggests that much of the selling may already be priced in, leaving limited room for additional aggressive shorting. If the market continues its upward momentum, it could trigger short-covering by FIIs, potentially leading to fresh buying and renewed participation. So, while they may not be back in full swing yet, the setup is such that any sustained rally could act as a catalyst for a stronger FII comeback.
What is your June target for Bank Nifty, which has seen a breakout after several weeks of consolidation?
The Banking benchmark index, Bank Nifty, has given a stage-2 cup pattern breakout on the daily scale. Further, it has formed a sizeable bullish candle on the breakout, which adds strength to the breakout. Also, it has marked a fresh all-time high.
Technically, all the moving averages and momentum-based indicators suggest strong bullish momentum in the index. The daily RSI is quoting at 67.45, and it is on a rising trajectory, which suggests strong bullish momentum.
As per the measured rule of cup pattern, the upside target is placed at the 58,700 level. While on the downside, the zone of 55,700-55,600 is likely to provide the cushion in case of any immediate decline.
What are your two picks for next week, considering the improved momentum?
The stock has given a horizontal trendline breakout on the daily scale. This breakout is confirmed by robust volume. In addition, the stock has formed a sizeable bullish candle on the breakout day, which adds strength to the breakout. The daily RSI has taken support near the 60 mark and thereafter witnessed a sharp rebound, which is a bullish sign as per RSI range shift rules. Hence, we recommend accumulating the stock in the zone of Rs 422-418 level with a stop-loss of Rs 400. On the upside, it is likely to test the level of Rs 460 in the short term.
The stock has recently retested its breakout level and again witnessed a strong bullish momentum. The reversal is confirmed by robust volume. Currently, the stock is trading above its short-term moving averages. Further, the daily RSI is in a super bullish zone as per RSI range shift rules. Hence, we recommend accumulating the stock in the zone of Rs 197-195 levels with a stop-loss of Rs 185. On the upside, it is likely to test the level of Rs 220 in the short term.
Are you bullish on HDFC Bank and Bajaj Finance after reading the charts?
Yes, both HDFC Bank and Bajaj Finance have given trendline breakouts on the daily chart, indicating a shift in momentum. Technically, both stocks are trading above key moving averages, and momentum indicators are aligned positively, suggesting strong bullish undertones. The setup points towards further upside potential in the near term.
Do you see the Financial Services and Realty indices looking strong on the charts?
Yes, both the Financial Services and Realty indices are showing strong relative strength and are outperforming the frontline indices. The ratio charts Versus Nifty are exhibiting a clear upward trajectory, confirming sectoral leadership. Technically, both indices are trading above key moving averages, and momentum indicators are firmly in bullish territory, indicating strong and sustained upward momentum.
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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