F&O Talk| Nifty faces key hurdles at 24,600, Bank Nifty scales new peak with 7% rally. What’s ahead? Explains Sudeep Shah

The Nifty initially surged sharply to record an intraday high of 24,589 on Friday. However, the index later faced aggressive selling pressure, slipping to an intraday low of 24,238, reflecting heightened intraday volatility.

The market sentiment improved as trade war fears between the U.S. and China eased, with China signaling openness to negotiations. Additionally, foreign institutional inflows provided further support to domestic equities.

From a sectoral perspective, Oil & Gas, Financial Services, and Information Technology outperformed, while weakness was evident in Consumer Durables, Metals, Realty, and Pharmaceuticals.

Analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, at SBI Securities, interacted with ET Markets regarding the outlook on Nifty and Bank Nifty, along with an index strategy for the upcoming week. Following are the edited excerpts from his chat:

What is your view on markets? How are markets performing amid war tensions after the Pahalgam attack?

Despite the rising geopolitical tensions following the Pahalgam attack, the benchmark index Nifty has shown remarkable resilience. It wrapped up April with an impressive gain of 3.46%, forming a sizeable bullish candle with a long lower shadow on the monthly chart — a clear sign that buying interest emerged every time the index dipped. This strong price action highlights the market’s underlying strength even amid external pressures.

What makes this rally even more significant is that it unfolded against the backdrop of global headwinds — including trade war concerns, India-Pakistan strain, and a sharp decline in the US dollar index. Yet, domestic markets managed to hold firm, supported by steady buying and improving investor sentiment.

Technically, Nifty continues to trade well above its key short and long-term moving averages, maintaining its bullish bias. The daily RSI also recently rebounded after finding support near the 60 mark, a positive signal based on RSI range shift rules. However, given the prevailing war tensions, we expect the index to consolidate within a broad range of 24,600 to 23,800 in the near term, as investors adopt a cautious approach.

View on Nifty? What is your say on the index with key levels?

We believe the index is likely to consolidate in a broad range of 24,600-23,800 levels as investors remain cautious amid the anticipated geopolitical tensions between India and Pakistan.

In the near term, the zone of 24,200-24,170 will serve as immediate support. A slip below 24,170 could open the door for further downside towards the stronger support zone of 23,850-23,800. On the upside, the 24,550-24,600 zone will act as a key hurdle. A sustained move above 24,600 could trigger a sharp rally towards 24,850, with the next target placed near the 25,100 mark.

View on Bank Nifty with Key Levels.

The banking benchmark index, Bank Nifty, has delivered a standout performance, strongly outperforming the broader frontline indices. Most notably, the index scaled a fresh all-time high during the April month, underscoring the strength in the banking space. By the end of April, Bank Nifty closed with an impressive gain of nearly 7%, extending its leadership role in the market rally.

Currently, with the index trading near its record-high levels, all key moving averages and momentum-based indicators are firmly aligned to the upside, reflecting strong underlying bullish momentum. However, following its sharp rally, Bank Nifty has entered a phase of consolidation over the past seven trading sessions. This pause is seen as a healthy sign, allowing the index to digest recent gains and build a base for the next leg of the move.

The broader technical setup remains favorable, but near-term consolidation may continue before fresh upward momentum resumes. Talking about crucial levels, the zone of 55,900-56,000 will act as a crucial hurdle for the index. Any sustainable move above the level of 56,000 will lead to a sharp upside rally upto the level of 56,600, followed by 57,000 in the short term. While on the downside, the zone of 54,500-54,400 will act as immediate support for the index.

FIIs seem to be comfortable returning to the Indian markets… Do you see this factor boosting the market despite the geopolitical tensions?

Yes, the return of FIIs is definitely a positive trigger for Indian markets. Historically, FII inflows have had a direct correlation with market uptrends, as they bring in liquidity and boost sentiment. Even though geopolitical tensions persist, the comfort shown by FIIs suggests that they see resilience in India’s domestic fundamentals, like stable macro indicators and better-than-expected corporate earnings. So, while global jitters may cause short-term volatility, sustained FII buying can provide an underlying support and help markets absorb external shocks.

A potential India-Pakistan conflict, Trump tariffs, and Q4 earnings. What do you think the market has already priced in…and what can be a potential surprise?

The market seems to have already priced in much of the geopolitical risk, including the India-Pakistan tensions and global trade concerns like Trump’s tariffs. The steady recovery and FII inflows indicate that investors are focusing more on domestic resilience. However, any sudden escalation in geopolitical conflict may increase the volatility significantly.

Coming to the earnings that were posted this week, let’s start with the market leader- Reliance. What are the charts telling us now? What’s your view?

Reliance has certainly grabbed attention with its recent move. Charts are clearly signaling strength. Over the past few sessions, Reliance Industries has not only outperformed the frontline indices but has done so with strong volume support — which adds credibility to the rally.

What’s even more interesting is that the ratio chart of Reliance versus Nifty has given a neckline breakout and is now sitting at a 32-week high, reflecting sustained outperformance against the broader market. Technically, its moving average setup also points to strong bullish momentum, suggesting that the broader trend remains intact.

However, there’s a bit of caution on the short-term front. The daily RSI is inching close to the overbought zone, hinting at a possible cooling-off or consolidation phase in the near term. So, while we expect some pause or sideways action in the short run, the bigger trend for Reliance continues to look strong and positive.

How about the Bajaj twins? On the face of it, both companies posted YoY surge in profit, but eventually disappointed the street. What sense are these stocks making on the charts?

Both Bajaj Finance and Bajaj Finserv are showing mixed signals on the charts right now. On Friday, both stocks found support right near their 50-day EMA and staged a smart rebound from there. This indicates that buyers are stepping in at crucial support zones, which is a positive sign.

However, when we look at the momentum indicators and oscillators, they suggest that while the downside seems protected for now, a period of consolidation with a positive bias is likely in the short term. So, rather than an immediate breakout, we might see range-bound action before the next directional move unfolds.

Defense stocks are in the picture again due to the India-Pakistan tension. How do you play this theme? View on Paras Defense and BEL?

Defense stocks are showing clear leadership amid the India-Pakistan tension, and charts are aligning with this theme. The Nifty India Defense index continues to outperform the frontline indices and is trading well above its key short and long-term moving averages. Momentum indicators and oscillators are also firmly supporting the bullish structure, suggesting that this outperformance is likely to continue in the near term.

Coming to stocks, both Paras Defense and BEL are displaying strong bullish momentum on the charts. Their price structures remain positive, supported by healthy volumes, and any dips are likely to attract fresh buying. So, the defense theme looks well-placed to outperform in the short term, and both these counters can be played as part of that view.

Any stock recommendations with those sectors?

Technically, BDL, HAL, MAZDOCK, GRSE, and Solar Industries are likely to outperform in 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)