Nifty needs to close above 12,065 for momentum to get stronger, stock & sector rotation remains healthy

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26 Aug, 2025 12:21

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The Nifty is expected to continue its gradual journey within its immediate range of 12,065-11,580. A firm close above 12,065 is the immediate requisite for the momentum to get stronger as the stock and sector rotation remains healthy. Options data registered fresh open interest additions in 11,700 and 11,800 strikes, which primarily looks like fresh PE writing complementing a bullish scenario.

Momentum indicators are yet to witness an overbought state while there are no signs of divergence on its daily scale. A breach above 12,065 could push the index towards 12,146, which would be a key assessment of its ongoing strength, until then, existing longs should be retained with a stop below 11,580.

The ongoing momentum that was pushing the stock lower for the past nine weeks seems to be getting attested as the stock holds above its long-term support average placed around Rs 400. Even on its daily scale, there is a clear evidence of a positive divergence on its daily RSI, which is an early sign of a trend reversal. The latest 'Homing Pigeon' formation needs affirmation that could set the bullish tone once above Rs 415. Trading longs could be considered once above Rs 415 with a stop below Rs 398 for a strong short-covering based move beyond Rs 450.

MGL has been oscillating within the Rs 800-1,100 band for almost 11 quarters now. The recent breakout from a 'Falling Wedge' pattern on the daily scale reconfirms the strength of its range support zone. The occurrence of Spike on its weekly scale also complements the strength that has been developing over the past few days as displayed by its Price- RSI divergence on the daily scale. We expect the stock to continue its mean reversion within the major range, hence portfolio longs should now be considered with a stop below Rs 780 for an intermediate target of up to Rs 940 (200-DEMA) followed by Rs 1,100 in few months.

The secular upmove is expected to continue as the ongoing Bullish Pennant formation on its weekly scale looks mature for a breakout. The stock is yet to witness an overbought condition on its daily scale while momentum could pick up once it manages to sustain above Rs 1,800-1,820 zone. With its 5-WEMA rising, its weekly RSI converging likely to witness a fresh momentum soon which could be participated with a stop below Rs 1,710 for an initial pattern target up to Rs 2,050.