Nifty, Bank Nifty set for new lows, rally in banks doesn’t change bearish conviction: Sushil Kedia

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.