F&O Talk| Nifty eyes further gains after crossing 25k mark: Is 25,600 the next target? Sudeep Shah weighs in

The Indian equity market staged a remarkable comeback this week, with the benchmark Nifty 50 surging by over 1,000 points to close above the crucial 25,000 mark. This rally effectively wiped out all losses incurred since October 2024, signaling renewed investor confidence in the market. The sharp rise was driven by strong buying interest across sectors, particularly in heavyweight stocks, as positive sentiment returned to the market.

The week commenced on a strong note, fueled by significant developments over the weekend involving Operation Sindoor, a successful military operation conducted by the Indian armed forces, which resulted in a cessation of hostilities between India and Pakistan. The improved geopolitical environment bolstered market sentiment, leading to substantial gains in both frontline indices and broader markets. The BSE Midcap and Smallcap indices also saw impressive rallies, gaining 6.9% and 9.2%, respectively, as investors flocked to riskier assets amid rising optimism.

With this, analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, SBI Securities, interacted with ET Markets regarding the outlook on Nifty and Bank Nifty. Following are the edited excerpts from his chat:

The US-China trade deal has been well celebrated this week. What are you reading in the market right now?

“A weekend can change more than just calendars—it can reshape market psychology.” Last Friday, i.e. May 09, Indian markets were gripped by anxiety as tensions between India and Pakistan escalated, casting a shadow of uncertainty over investor confidence. However, over the weekend, a remarkable shift unfolded. The mood in the Indian financial landscape has turned decisively upbeat, buoyed by a confluence of calming geopolitical signals, encouraging economic indicators, and robust corporate developments. Together, these factors have not only altered investor sentiment but have also injected a fresh wave of optimism and confidence into the system.

The Indian equity market showcased this transformation in full force, as the benchmark Nifty closed the week above the psychological 25,000 mark, posting an impressive gain of over 4%. What truly stood out was the powerful outperformance in the broader markets. The Nifty Midcap 100 surged by more than 7%, while the Nifty Smallcap 100 rocketed over 9%—its strongest weekly gain since June 2020. This broad-based rally reflects a deepening bullish sentiment and growing investor confidence beyond the headline index. Sectoral rotation played a key role, with strong traction in Defense, Railways, Metal, and IT stocks, further underlining the healthy participation from multiple corners of the market.The swift change in sentiment has opened the door for renewed momentum and fresh opportunities. With strong sectoral participation and a clear upward trajectory, the market appears poised to build on this rally, backed by both technical strength and improving risk appetite.

Nifty has shown a significant surge now. Are we aiming for further highs? Or can we expect some consolidation? What are the key levels ?

From a technical standpoint, the current chart structure suggests that the bullish momentum is likely to extend into the coming week. We expect Nifty to move toward 25,300 in the short term, with the potential to stretch further toward 25,600. On the downside, the zone of 24,750-24,700 is likely to provide a cushion in case of any immediate decline.

How does Bank Nifty currently look like? Any levels to watch out there?

Since April 23, 2025, the banking benchmark index, Bank Nifty, has been underperforming the broader Nifty index. This is evident from the ratio chart, which has been forming lower lows relative to Nifty, indicating continued relative weakness. Despite this, the major trend of the index remains bullish as it is quoting above its short and long-term moving averages. The daily RSI is in bullish territory. From a price action perspective, the index is forming a stage-2 cup pattern on a daily scale.

Talking about crucial levels, the zone of 55,700-55,800 will act as a crucial hurdle for the index. Any sustainable move above the level of 55,800 will lead to a sharp upside rally upto the level of 56,700, followed by the 57,500 levels. While on the downside, the zone of 54,800-54,700 is likely to act as immediate support for the index.

In the current situation, what is your call with respect to trading? Trading the index is better or stocks?

Given the current market scenario, we believe that focusing on stock-specific opportunities is more favorable than trading the index. The Midcap and Small Cap segments are witnessing strong momentum, offering a broader set of high-potential setups. In such an environment, a stock-picking approach can yield better risk-reward outcomes compared to index trading.

What’s your take on the defense stocks. Is there more heat left?

In line with our expectations, the Nifty India Defense has strongly outperformed frontline indices as it has surged by over 17% in the last week. However, as per the RSI range shift rules, the index is in overbought condition. Hence, we recommend avoiding building a fresh position in the defense space as the risk-reward will not be favorable at current levels.

What’s your view on the Metal Sector?

The Nifty Metal index gave a consolidation breakout on Monday and thereafter continued its northward journey. Currently, it is trading above its short and long-term moving averages. These averages are started edging higher, which is a bullish sign. The daily RSI is in bullish territory. Hence, we believe the metal space is likely to continue its northward journey in the next couple of trading sessions.

Let’s discuss the technical outlook on the stocks that posted their earnings on Friday: Hyundai, BHEL, and Delhivery.

Hyundai and BHEL are in strong uptrend, and as per current chart structure, they are likely to continue their outperformance in the short term. While, Delhivery is currently oscillating near its 200-day EMA level. Any sustainable move above the level of Rs 330 will lead to a sharp upside rally in the stock.

What are your thoughts on Hero MotoCorp? The company reported its earnings last week and the stock has shown a nice rally. Are any positions recommended?

Hero MotoCorp has surged above its 200-day EMA level for the first time after November 2024. Most noteworthy, it is moving higher along with the strong volume. The momentum indicators also suggest strong bullish momentum in the stock.

Let’s discuss IndusInd Bank once after the Rs 595 crore discrepancy, that has been identified.

The major trend of IndusInd Bank is bearish as it marks the sequence of lower tops and lower bottoms. Hence, we recommend avoiding IndusInd Bank for now as it is likely to continue its correction from current levels.

Would you like to highlight some key sectors and stocks for us?

The Nifty Capital Market has given a horizontal trendline breakout on a daily scale, which is a bullish sign. Further, the momentum indicators and oscillators are also suggesting strong bullish momentum. Hence, we believe it is likely to outperform in the short term. The Railway stocks have witnessed a strong breakout on Friday’s trading session along with robust volume. Hence, we believe railway stocks are likely to outperform in the short term.

Technically, IRFC, Railtel, IRCON, CDSL, CAMS, GMDCLTD, and TATATECH look good for the short term.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)