The Nifty’s recent rally faces a reality test as the 24,300 breakout faltered, signaling underlying exhaustion. With the VIX high and Bank Nifty showing bearish derivative signals, caution is advised. From the volatility of Vedanta’s split to the bullish setups of Senco and Moschip, here is Anand James’ technical roadmap for navigating the week ahead.
Edited excerpts from a conversation with Anand James, Chief Market Strategist, Geojit Investments:
Nifty ended with a weekly gain for the second time in a row. How sustainable is the uptrend we are currently seeing?
After forming a base near 23,800, the rebound subsequently looked set to support a rapid ascent towards 25,000-25,600. However, the breakout move beyond 24,300 failed to raise doubts about the sustainability of the upward attempts. With the VIX not far from 17, this also suggests that traders continue to entertain expectations of volatility, with momentum indicators. This prompts us to cautiously look at the 24,120 region, coinciding with the 20-day SMA, failure to float above this could expose 23,400.
Nifty Bank also saw a steady rise, but this comes after two weeks of losses. Where do you see the index moving in the coming week?
Nifty Bank’s recent steady rise came after nearly two weeks of losses, but the broader pattern remains cautious. On the daily chart, the MACD gave a bearish signal breakout, which continues to persist, indicating that the dominant trend is still corrective despite the rebound. Price action also reflects a lack of strength, with only one day of significant gains during the week, while the remaining sessions saw selling pressure. The 54,300-54,000 area remains a strong support pocket and holds the key to preventing a deeper decline. On the upside, 56,300 is a well-defined supply zone, where any rebound is likely to be met with resistance.
The derived picture adds to the bearish bias. Nearly 60% of near-OTM puts experienced long adds and ITM calls experienced short adds, reflecting defensive positioning. Additionally, about 40% of stock futures saw short additions on Friday, and nearly 50% on a weekly basis, suggesting traders are positioned for further weakness.
From an equity-specific perspective, ICICI Bank, SBI and Axis Bank look vulnerable to further declines and could continue to drag the index lower. Overall, Nifty Bank may remain in a weak range between 54,000 and 56,300, with risks tilted to the downside unless momentum improves decisively.
Firstsource and Godrej Industries were among the top gainers of the week. What are the charts showing right now?
For First Source, a rise to the 200-day SMA, now at 310, appears to be the expected move, after closing above the recent high as well as the upper Bollinger band. Alternatively, given last Friday’s strong gains, failure to contain declines above 258 could signal a premature end to the rally. For Godrej Industries, 1244-278 seems to be a pause point for the current bullish phase. Those who prefer to risk a reversal and let their profits run up to perhaps 1324 should have a stop loss at least around 1154.
Vedanta shares ended the week up 9% amid a split. How to trade now?
With the value release already announced and the listing of the demerged entities pending, activity persisted with Vedanta. The upward trajectory is still uncertain, and with two days of decline prompting oscillators to signal negative divergence, we are not in favor of prices continuing higher.
Give us your best ideas of the week.
SENCO (LTP: 365)
See: Buy
Target: 400
SL: 339
SENCO shows a strong bullish reversal over longer time frames. On the weekly chart, the stock decisively crossed the Supertrend, supported by a clearly bullish Marubozu candle, reflecting strong demand and conviction buying. This breakout signals a shift from consolidation to resumption of the upward trend.
Momentum indicators further strengthen the bullish arguments. The monthly MACD gave a bullish signal breakout, indicating the start of a medium to long term uptrend. This alignment of weekly price action and monthly momentum suggests sustainability of the movement. With price holding above key breakout levels, the stock has the potential to move towards 400 in the coming weeks. 339 should act as a protective stop-loss, below which the bullish structure would weaken.
MOSCHIP (LTP: 227)
See: Buy
Target: 285
SL: 199
Moschip Technologies displays a strong bullish reversal supported by multi-period confirmation. The stock surpassed the weekly Supertrend and formed a clearly bullish Marubozu candle, signaling a conviction buy. Over a longer period, a break of the monthly downtrend line marks the transition from a prolonged corrective phase to a potential structural uptrend. Strengthening the pattern, the stock is now trading above its 20- and 50-period moving averages on the daily and weekly charts, indicating improvement in trend strength and momentum alignment.
As long as prices hold above key support, the structure favors a further rise towards 285 in the short to medium term. 199 remains a critical stop loss, below which the bullish view would be canceled.
