Bullish Nifty Charts Signal Further Upside; Sudeep Shah Picks 7 Stocks for the Week Ahead

Indian stock markets staged a powerful rebound at the end of the week, with benchmark indices posting substantial gains amid improving global sentiment and easing crude oil prices. The rally pushed the Sensex higher by more than 1,600 points while the Nifty50 climbed above 23,600, strengthening expectations that the market could extend its recovery in the coming sessions.

According to Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, the recent market move is supported by a combination of bullish technical signals, improving derivatives positioning, and resilient investor sentiment.

Nifty Shows Signs of Strength

The Nifty spent most of the week trading in a volatile range before witnessing a strong breakout on Friday. Shah noted that the index repeatedly found support near a key Fibonacci retracement zone, indicating that buyers were actively defending lower levels.

A major technical development occurred when Nifty closed above its 20-day exponential moving average for the first time in several weeks. Momentum indicators also improved significantly, with the Relative Strength Index moving above the 50 level and stochastic indicators generating bullish signals.

These developments suggest that short-term sentiment has improved considerably.

Key Levels to Watch for Nifty

Technical analysis indicates that Nifty may continue its upward trajectory if momentum remains intact.

Important levels include:

• Immediate upside target: 23,800
• Psychological resistance: 24,000
• Key support zone: 23,350–23,300

As long as the support zone remains intact, analysts believe the broader bullish structure remains valid.

Bank Nifty Continues to Outperform

Among sectoral indices, Bank Nifty emerged as one of the strongest performers. The index recently confirmed a breakout from a symmetrical triangle pattern, a development often viewed as bullish by technical traders.

Banking stocks have played a crucial role in supporting the broader market recovery. The index currently trades above its major moving averages, while momentum indicators continue to strengthen.

According to Shah, Bank Nifty could advance toward:

• 57,500 in the near term
• 58,300 as the next major target

Support is expected around the 56,200–56,000 zone.

Nifty IT Remains Under Pressure

While banking shares strengthened, the information technology sector continued to face selling pressure.

Nifty IT remains below key moving averages, and recent attempts to break above resistance levels have failed. Technical indicators such as RSI and MACD continue to point toward weakening momentum.

Analysts identify the following levels:

• Major support: 27,050–27,000
• Immediate resistance: 28,250–28,300

A breakdown below support could trigger additional weakness, while a move above resistance may improve sentiment toward the sector.

Derivatives Data Signals Improving Sentiment

One of the more encouraging developments came from derivatives markets.

The Put-Call Ratio recovered from depressed levels seen earlier in the month, creating a bullish divergence against price action. Such divergences often indicate that bearish momentum is losing strength and that buyers may be regaining control.

Foreign institutional investor positioning also improved. The long-short ratio in index futures increased over recent sessions, suggesting meaningful short covering activity.

Market participants interpreted these developments as evidence that downside pressure may be easing.

HDFC Bank Strategy

HDFC Bank participated in Friday's market rally and reclaimed its 20-day moving average. While the move is encouraging, Shah cautioned that additional confirmation is required before declaring a complete trend reversal.

Several indicators are beginning to improve, including relative strength and directional momentum measures.

Key support remains between Rs 725 and Rs 730. As long as the stock stays above this zone, analysts expect a constructive outlook.

HFCL Outlook

HFCL has experienced profit booking after a strong rally earlier this month. Despite the correction, the stock continues to trade above important moving averages.

The primary support zone is located between Rs 155 and Rs 160.

Technical analysts believe the broader uptrend remains intact provided the stock maintains support above these levels.

Sterlite Technologies Faces Consolidation

Sterlite Technologies has also undergone a healthy correction after reaching recent highs.

Momentum indicators suggest that further consolidation cannot be ruled out. However, the longer-term bullish structure remains intact.

Key support for the stock lies between Rs 525 and Rs 530.

A successful defense of this support region could pave the way for another upward move over the medium term.

Seven Stocks on Sudeep Shah's Watchlist

Shah identified seven stocks that currently display favorable technical structures and could attract trader interest in the short term:

1. Avalon Technologies
2. KEI Industries
3. Titagarh Rail Systems
4. Data Patterns
5. AU Small Finance Bank
6. Kotak Mahindra Bank
7. Power Mech Projects

These stocks have shown improving momentum characteristics and remain on analysts' radar heading into the new trading week.

Market Outlook

The combination of improving technical indicators, strengthening derivatives data, and easing concerns around crude oil prices has improved the outlook for Indian equities.

While volatility may persist due to global geopolitical developments, analysts believe the broader market structure has strengthened considerably compared with earlier sessions.

A sustained move above recent resistance levels could provide the momentum needed for Nifty to challenge the 24,000 mark, while Bank Nifty may continue to lead gains if banking stocks maintain their current strength.