The Nifty and Bank Nifty indices, which staged a sharp rebound from their March lows, are showing signs of exhaustion and are likely to break below previous troughs, technical strategist Sushil Kedia has said. Despite the recent breathtaking rally - a hallmark of bear market structures - technical patterns suggest markets are entering a fresh sell-off phase, Kedia added.
The veteran investor said the steep rally from Nifty’s March low of 21,800 was anticipated, but it has not altered the broader bearish setup. The latest rally has retraced about 60% of the six-month decline - from 26,400 to 21,800 - in just three weeks, an unusual move that, he warned, often precedes renewed weakness.
Both Nifty and Bank Nifty have formed gravestone doji patterns on the weekly candlestick charts - a traditionally ominous signal that requires confirmation through further declines, Kedia said. He added that combining candlestick analysis with Elliott Wave and momentum studies reinforces the bearish view.
The rally in Bank Nifty, which recently touched a record high in futures trading, is a ‘trap’, he said, driven by misplaced optimism that banks would be insulated from new global tariffs. Kedia expects Nifty to fall well below its recent low of 21,800, potentially testing 21,300, with risks of an extended slide toward 20,000 if that support fails. This move could happen in a timeframe of 10-12 weeks, said the technical strategist.
“This is a high-probability pattern,” Kedia said. “The all-time high in Bank Nifty futures doesn’t change the bearish conviction. We are servants and slaves of chart patterns.”
Watch the full conversation here: Sushil Kedia, Founder, Kedianomics, on What’s Next for Nifty and Bank Nifty
Even without a full-blown conflict with Pakistan, the market trajectory appears lower, he said, with a potential bottom forming over the next two to three months. Kedia cautioned that while new lows are likely, he does not expect a massive collapse below prior lows, but enough to create ‘technical pandemonium’ in markets.
Earlier this year, when sentiment was bleak, Kedia had said that he was among the few calling for a sharp rebound - a call that materialized with Nifty's surge to near 24,300 levels.
Going forward, he emphasised flexibility, saying if chart patterns change, forecasts would have to be reassessed.
Disclaimer: The views and investment tips expressed by 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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