F&O Talk | Market mood lifts, Nifty to eye 25,740 as immediate target: Rahul Ghose

The Indian stock market staged a powerful rebound this week, with the benchmark Nifty 50 soaring over 1,000 points to reclaim the critical 25,000 level. The surge helped the index erase all the losses accumulated since October 2024, signaling a strong comeback for the market.

The week began on a robust note, driven by significant weekend developments on the geopolitical front. The cessation of hostilities between India and Pakistan, following the successful execution of Operation Sindoor by the Indian armed forces, injected a wave of optimism into investor sentiment, propelling markets higher.

With this, analyst Rahul Ghose, Founder & CEO, Octanom Tech & Hedged.in, interacted with ET Markets regarding the outlook on Nifty and Bank Nifty. Following are the edited excerpts from his chat:

So, how is the market mood like? The US-China trade deal has been well celebrated this week. What are you reading in the market right now?

The market sentiment has turned decisively positive this week, with the formal resolution of the US-China trade deal acting as a strong tailwind. This deal not only reduces geopolitical overhang but also improves the global trade outlook, which is critical for export-driven sectors. Domestically, strong macro stability—with April CPI easing to 4.4% and core inflation firmly anchored—has given the RBI enough headroom to maintain a pro-growth stance. FIIs, which were net sellers in Q1 2025, have started returning with over Rs 8,000 crore pumped in this week alone, showing renewed confidence.However, one must also note that this rally is sentiment-driven to a large extent and is running ahead of fundamentals in certain pockets. That calls for selectivity and a valuation-conscious approach, especially as earnings season has been mixed.

Nifty has shown a significant surge now. Are we aiming for further highs? Or can we expect some consolidation? And any key levels you’d like to mention?

Yes, we can expect further highs in the short-medium term. The market’s momentum is strong & most of the critical resistance zones like 24,300/24,800 have been convincingly broken. The Nifty RSI levels on daily, weekly, as well as monthly time frames are hovering around 64-65 levels, which shows bullishness & also markets are far from being overbought. The rally still has legs & we would only expect this rally to pause only around the 25,600-25,740 band, followed by 26,150-26,200. This is prior to where markets started their descent.

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

Bank Nifty also looks bullish. Currently, the index is consolidating in a small symmetrical triangle on the daily chart, showing sideways movement, however, one can expect a breakout & look to create fresh long positions on closing above 56,100 for higher targets. On the downside, 54,000 is likely to act as a strong support.

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

This is a time when selective stock trading can outperform index trading. While the indices are moving up, the reward-to-risk ratio in them is not very high. The rally since May 9th has been more or less a vertical rally, which could lead to wide stop losses. Individual stocks, on the other hand, can offer a better reward to risk ratio as many of them are available around their weekly & monthly support levels, promising better RR.

What is your take on defence stocks? Is there more heat left?

Defence stocks have seen a sharp surge in the last few weeks, triggered not just by strong fundamentals but also due to heightened geopolitical tensions. The recent India-Pakistan border skirmish, though controlled quickly diplomatically, has brought the spotlight back on national security. This led to a strong rally in key defence counters—HAL jumped over 12%, BEL by 9%, and Cochin Shipyard surged nearly 15% in just 4 sessions post the incident, driven by expectations of faster procurement and a boost in indigenous production.

Beyond the short-term trigger, the structural story remains compelling. The government continues to push for Atmanirbharta in defence, with over Rs 1.6 lakh crore worth of projects already moved to the domestic procurement list. Moreover, the recent DAC (Defence Acquisition Council) clearance of deals worth Rs 45,000 crore is a further signal of momentum.

Technically, many of these stocks are overbought in the short term, but there’s no sign of a reversal yet. Investors should look for minor dips or consolidations to accumulate fundamentally strong names. HAL, BEL, and Mazagon Dock continue to show robust order books and execution capability.

Verdict: While some of the recent rally is event-driven, the structural story has legs. There is still steam left for medium- to long-term investors, especially if the government fast-tracks defence manufacturing and exports in FY26.

Let’s have a discussion on the metal sector. Please throw some light for us on the sector.

The metal sector has seen renewed interest post the US-China trade truce and China’s announcement of a fresh infrastructure stimulus worth $100 billion. Prices of base metals like copper and aluminium are firming up globally.

Domestic steel majors like Tata Steel and JSW Steel are well-positioned given their deleverage balance sheets. Hindalco, too, benefits from higher aluminium prices and Novelis’ positive guidance. However, with valuations stretched, a staggered approach is advised. Watch for price confirmation in global LME charts and Chinese data for further cues.

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

Hyundai Motors reported a 3.7% year-on-year (YoY) decline in consolidated net profit at Rs 1,614 crore in Q4FY25 as against Rs 1,677 crore reported in the year-ago period. The company’s revenue from operations in the March-ended quarter stood at Rs 17,940 crore, which was up 1.5% versus Rs 17,671 crore in the corresponding quarter of the last financial year.

Technically, Hyundai Motors is looking strong. Although the current price is trading closer to resistance levels of Rs 1,930, the underlying strong momentum suggests the level is likely to be taken out. Traders can look to enter on a break above Rs 1,930 levels.

BHEL reported a consolidated net profit of Rs 504.45 crore in Q4 FY25, marking a 3% year-on-year increase. The company’s revenue rose by 9% to Rs 8,993 crore, driven by a significant surge in its industry segment revenue, which increased to Rs 2,800.96 crore. The board has recommended a final dividend of Rs 0.50 per share for FY25.

From a technical standpoint, BHEL’s stock has been consolidating after a recent rally. Key support is observed at Rs 220, with resistance at Rs 275-280 levels. A breakout above Rs 280 with strong volume could signal further upside potential. Investors should monitor order inflows and execution timelines, as these will be critical for sustained growth.

Delhivery achieved a significant turnaround in Q4 FY25, posting a consolidated net profit of Rs 72.6 crore, compared to a loss of Rs 68.5 crore in the same quarter last year. Revenue from operations increased by 5.6% year-on-year to Rs 2,192 crore. The company also reported its first full-year net profit of Rs 162 crore for FY25, driven by growth in its part-truckload (PTL) business and operational efficiencies.

Technically, Delhivery’s stock has shown strength, trading above its key moving averages. Support is seen at Rs 300, with resistance at Rs 350. A sustained move above Rs 350 could lead to further gains. The stock can move to Rs 390-400 levels quickly. Investors should watch for developments related to the company’s proposed acquisition of Ecom Express, as successful integration could enhance Delhivery’s market position

Hero Motocorp reported its earnings earlier this week and the stock has shown a nice rally. Any positions recommended?

Hero’s earnings surprised positively on margins and rural sales pickup. Two-wheeler demand is improving with softening fuel prices and government rural spending. Technically, Rs 4,530 is a breakout level. As long as it holds above Rs 4,530, the uptrend remains intact. Traders can consider riding the trend with potential targets of Rs 5,400-5,600.

Can you throw some light on IndusInd Bank stock from a technical point of view after the Rs 595 crore discrepancy that has been identified?

The discrepancy, though under investigation, raises governance concerns. The bank has clarified that customer funds were unaffected, but such events can dent investor confidence in the short term. The stock may remain under pressure, and until there’s clarity from the forensic audit, it’s better to avoid fresh longs. Rs 630-600 is the immediate support; a breach could see it going further down.

Any sectors to watch out for?

Banking sector, Metal sector & Financial services are looking positive on price charts & can look to outperform.

Any stocks in those sectors?

In BankNifty, ICICI & HDFC Bank, in financial services HDFC Life & Chola financials, & in metals heavyweights like Jindal Steel, JSW Steel & Tata Steel can be looked at on pullback

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