F&O Talk: Nifty Hits Resistance at 25,250-25,300 Amid Geopolitical Worries, Consolidation Expected – Sudeep Shah of SBI Securities

Nifty has been trading sideways between 25,200 and 25,800 for six days. On Friday, it closed below the 25,000 mark, facing resistance at 25,044, where the 50-day Exponential Moving Average (EMA) is positioned.

On October 11, after a volatile session, Indian stock markets ended lower, with Nifty closing below 25,000. The Sensex fell by 230.05 points (0.28%) to finish at 81,381.36, and the Nifty dropped 34.20 points (0.14%) to end at 24,964.30.

Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research at SBI Securities, spoke with ET Markets about the outlook for Nifty, Bank Nifty, and his index strategy for the coming week. Below are highlights from his conversation:

What’s Next for Nifty?

Nifty has corrected by nearly 6% from its all-time high, mainly due to aggressive Foreign Institutional Investor (FII) selling and geopolitical tensions in the Middle East. Despite these issues, Nifty found support around 24,694 and has been consolidating since then.

Technically, Nifty has been trading within a narrow range for the last three sessions, which has flattened the 50-day EMA. The daily Relative Strength Index (RSI) is showing indecision as it moves sideways. Based on this, we expect Nifty to continue consolidating for the next few sessions.

In terms of levels, Nifty has immediate support in the 24,700-24,650 zone. On the upside, resistance is seen at 25,250-25,300. A move beyond these levels could trigger a stronger directional move. If Nifty drops below 24,650, the 100-day EMA at 24,430 will act as the next key support. On the flip side, if it climbs above 25,300, a sharp rally could push it to 25,600, followed by 25,850.

What About Bank Nifty?

Bank Nifty has fallen over 4,000 points from its all-time high in just seven trading sessions. However, it bounced back after hitting a low of 50,194 on October 7, recovering nearly 1,000 points. It ended the week slightly lower at 51,172, down 0.56%.

On the weekly chart, Bank Nifty has formed a small candle with a long lower shadow, indicating buying interest at lower levels. The index has also reclaimed its 100-day EMA, and the daily RSI is moving sideways. We expect Bank Nifty to consolidate for the next few sessions.

In terms of levels, the 50-day EMA around 51,700-51,800 is a key resistance zone. A move above 51,800 could trigger a pullback to 52,500, followed by 53,100. On the downside, support is at 50,700-50,600. A break below 50,600 could lead to further declines, with targets at 50,000 and 49,600.

Nifty IT Shows Resilience Despite TCS Results: What’s Next?

Even though TCS posted weaker results, Nifty IT remained resilient and closed the week on a stable note. Over the past few weeks, Nifty IT has been consolidating and forming a bullish flag pattern. Going forward, the 43,100-43,200 zone will be a key resistance, as it aligns with the upper trendline of the flag. If Nifty IT breaks above 43,200, we could see a rally to 44,300, followed by 45,000.

Which Sectors Could Outperform This Week?

Last week, both the Nifty Midcap 100 and Nifty Small Cap 100 indices found support near their 20-week EMA and saw a strong recovery, outperforming the broader indices. Both indices formed candles with long lower shadows, suggesting buying interest at lower levels. We expect these indices to continue outperforming in the short term.

In addition, the Nifty Pharma and Healthcare sectors are likely to perform well in the coming days.

HDFC AMC’s Strong Close: What’s Your View?

HDFC AMC recently found support near its 20-week EMA and saw a sharp recovery, pushing it above both its 20-day and 50-day EMAs. These moving averages are starting to edge higher, which is a positive sign. The daily RSI is also approaching 60, suggesting further upside.

We expect HDFC AMC to continue its upward movement and potentially reach 4,550, followed by 4,650. On the downside, the 20-day EMA around 4,360-4,340 will act as support.

Indian Hotels: Will the Uptrend Continue?

Indian Hotels has bounced back after finding support near the 50% Fibonacci retracement level from its previous rally (Rs 571-720). The stock is in a strong uptrend, trading above its short- and long-term moving averages, which are rising. The daily RSI has surged above 60 and is moving higher, indicating strength.

We expect Indian Hotels to continue its uptrend, with targets of 740, followed by 770. On the downside, support is at the 20-day EMA around 690-685.

NBFCs Like M&M Finance Under Pressure: Will the Downtrend Continue?

M&M Finance is likely to remain under pressure in the coming sessions. The stock recently broke below an upward sloping trendline, accompanied by high trading volumes. It is also trading below its 20-day, 50-day, 100-day, and 200-day EMAs, all of which are trending lower. The daily RSI is also in a bearish zone, suggesting further downside.

We expect M&M Finance to continue falling, with a target of 270 in the short term.

Any Stock Picks for the Short Term?

From a technical perspective, Exide Industries, National Aluminium, and Triveni Turbine are looking promising for short-term gains.