Technical view: Firm uptrend in store, Nifty looks set for 26,000

ARPAN SHAH SENIOR RESEARCH ANALYST, MONARCH NETWORTH CAPITAL

On the weekly chart, Nifty closed at an all-time high level and formed a bullish engulfing candlestick. Additionally, Bank Nifty broke above its most recent swing high and closed with a bullish candlestick. FII turned buyers in the cash segment while the India VIX fell 17.5%. Besides, US markets have turned bullish ahead of the Fed meeting. All these factors point to a positive bias. Traders can remain long on both indices. In the upcoming days, Bank Nifty will surpass its previous all-time high of 53,357, while Nifty is expected to reach 25,700.

In banking, traders can look to go long on Bank of Baroda and IndusInd. Nifty Metal index will likely go up sharply towards 10,000 level in the coming days. Traders can look to go long on Vedanta, Hindustan Copper and NMDC for a sharp upside. In realty, DLF and Oberoi Realty will go up gradually. ONGC has reached near its support and may bounce back. In small caps accumulate Praveg, EPL and Krystal Integrated.

Nifty has resumed its uptrend after finding support at the 24,850-24,800 zone. The current rally is likely to continue towards the 25,700–25,750 zone. The daily momentum indicator indicates negative divergence. However, until prices show a decisive weakness below 25,020 — the 20-day moving average — we continue to be positive on the Nifty. There may be phases of consolidation, but the undertone remains bullish. Dips towards intermediate support of 25,250-25,220 should be used as a buying opportunity for the target of 25,500-25,700. The structure becomes weak below 25,020.

We believe the current up move is likely to be broad based with participation from the underperforming sectors. Stocks like Godrej Properties, DLF, Hero MotoCorp and JSW Steel from the large-cap space can witness buying interest. In mid-caps, stocks like Exide Industries, NMDC and Federal Bank have favourable risk reward entry points.

A strong recovery culminated in an Engulfing Bullish candlestick pattern, signal ling robust upward momentum for the rest of the month. Options data for this series indicates a shift in the support from 24,800-25,000 to the 25,200 level. The upward momentum may extend towards 25,810, with the next target at 26,000. The broader trend continues to point towards a major target zone of 26,980, reinforcing the potential for further gains.

Investors should consider increasing longs on dips near the 25,200-25,000 support. With traders anticipating larger rate cuts, allocations to banking, financials, and IT should be increased. Key setups to watch include Kotak Bank, ICICI, IDFC First, CanFin Homes, Bajaj Finance, Infosys, Coforge, LTI Mindtree, DLF, and Oberoi Realty, which may benefit from this momentum.