F&O Talk| Nifty closes at 8-week high, Bulls to now eye 25,500–25,700 levels: Sudeep Shah

Investors continued to cheer the recently announced GST reforms while upgrades to growth expectations and improving domestic demand further underpinned sentiment. Additionally, optimism over the resumption of India–US trade talks, coupled with softer US inflation prints that reinforced expectations of a Fed rate cut, provided further support to the rally.

Indian equities ended the week on a strong note, supported by favorable domestic developments and a supportive global backdrop. The tone remained broadly positive throughout the week, aided by rotational participation of heavyweights across sectors. Consequently, both benchmark indices closed near the week’s high, with the Nifty settling at 25,114.00 and the Sensex at 81,904.70, registering gains of over 1.5% each.

With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ET Markets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Nifty ended the 2nd week in the green and closed above 25,000. How does the index look now?

For the second consecutive trading session, the benchmark index Nifty has concluded the week on a positive note, reinforcing the strength of the ongoing recovery. Over the past two weeks, the index has witnessed a gradual pullback of nearly 700 points, culminating in its highest weekly close in the last eight weeks—a sign of improving sentiment and technical resilience.

Currently, the Nifty is on the verge of giving a breakout of the Symmetrical Triangle pattern on a daily scale, which often precedes a sharp directional move. The index is trading above both its short-term and long-term moving averages, which have started to slope upwards—an encouraging signal for bulls.

Momentum indicators are also turning constructive. The daily RSI has climbed above the 60 mark for the first time since July 2025, indicating strengthening momentum. Meanwhile, the MACD remains in buy mode, and the rising MACD histogram suggests a pickup in upside momentum. Market breadth has improved significantly in recent sessions. Among Nifty constituents, 82% of stocks are trading above their 20-day EMA, while 76% are above their 50-day EMA—highlighting broad-based participation in the rally.

With technical indicators aligning positively and internal strength improving, Nifty appears well-positioned for a potential breakout. Talking about crucial levels, the zone of 25150-25200 will act as an immediate hurdle for the index. Any sustainable move above the level of 25200 will lead to a sharp upside rally up to the level of 25500, followed by 25700 in the short term. While on the downside, the zone of 24950-24900 is likely to provide a cushion in case of any immediate decline.

What is the view on Bank Nifty now, which also gave a green close on the weekly chart?

The banking benchmark index has continued its pullback rally for the second consecutive week, signalling a short-term recovery attempt after recent declines. From the recent low of 53561, the index has rebounded by over 1200 points in the last two weeks, reflecting a modest improvement in sentiment.

However, despite this recovery, the index remains below its 50-day and 100-day EMA—a sign that the broader trend still lacks confirmation. These moving averages continue to act as overhead resistance, and a decisive close above them will be crucial for a sustained uptrend. On the momentum front, the daily RSI is still in a sideways zone, but it is gradually edging higher, indicating a slow build-up in strength. A breakout above the 60 mark could further validate bullish momentum.

Going ahead, the zone of 55100-55200 will act as an immediate hurdle for the index. Any sustainable move above the level of 55200 will lead to extension of pullback rally upto the level of 56000 in the short term. While on the downside, the zone of 54400-54300 will act as crucial support for the index.

With Infosys' buyback on the table, how do you expect the stock to perform?

The buyback price is set at 1800 vs 1525 market price, that’s a premium of 18% from the current market price. Given that Infosys is down 19% on a year-to-date basis (YTD), the recent development can act as a short-term boost for the stock.

Technically, the stock has formed an Adam & Adam Double Bottom pattern on a daily scale. It is currently hovering around the neckline of the double bottom pattern. It is trading above its 20 and 50-day EMA levels. While the daily RSI is quoting at 5a 6 level and it is on the rising trajectory.

Going ahead, the neckline zone of 1540-1550 will be the crucial hurdle for the stock. Any sustainable move above the 1550 level will lead to a sharp upside rally in the stock. While on the downside, the zone of 1490-1480 is likely to provide a cushion in case of any immediate decline.

Given the backdrop, how do you read the IT sector?

The Nifty IT has recently formed an Adam & Adam Double Bottom pattern on the daily chart—a bullish reversal formation. The index is currently hovering around the neckline resistance of this pattern. It is trading above its 20-day and 50-day EMA, both of which are beginning to edge higher. A sustainable move above the 36500 level could trigger a sharp upside rally in the index, making it one to watch closely.

What other sectors are you looking at now?

Nifty India Defence: It has given a downward sloping trendline breakout on the daily chart, signalling a shift in trend. The index has also surged above its key moving averages, which are now beginning to slope upwards—a bullish sign. Notably, the daily RSI has crossed the 60 mark for the first time since June 2025, indicating strengthening momentum. With these signals aligning, the index is likely to continue its northward journey in the coming sessions.

Nifty CPSE and Nifty PSE: They have also shown strength, with both indices giving a downward sloping trendline breakout on the daily scale. This breakout suggests a potential shift in trend, and we believe these indices are well-positioned to outperform in the short term, supported by improving breadth and sentiment in the PSU space.

Beyond these, several other sectoral indices are showing signs of continued outperformance. Nifty Metal, Pharma, Healthcare, Automobile, and Consumer Durables are likely to maintain their positive momentum in the short term, supported by strong price action and favourable technical indicators.

And the stocks to watch out for?

A number of stocks are showing promising technical setups and could be on traders' radar in the short term. Based on chart patterns, momentum indicators, and moving average alignments, the following stocks are exhibiting bullish traits:

Defence & PSU Segment:

MAZDOCK, HAL, BEL, BEML, GRSE, TITAGARH — These defence and PSU names have shown strong price action, with several breaking out of consolidation zones and trading above key moving averages.

Pharma & Healthcare:

Dr. Reddy’s, GLENMARK, GLAND — Pharma stocks are gaining traction, supported by rising RSI and improving trend structure.

Financials:

BAJFINANCE, BAJAJFINSV — Both stocks have given a consolidation breakout on a daily scale, backed by strengthening momentum.

Metals & Commodities:

NATIONALUM, HINDALCO, HINDZINC, HINDCOPPER — Metal stocks are witnessing renewed buying interest, with several names trading above their short-term EMAs and forming bullish continuation patterns.

These stocks are technically well-placed and could offer trading opportunities in the near term, especially if broader market sentiment remains supportive.

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