A decisive break below the 20-day moving average has weakened the near-term technical structure of the Nifty, shifting the risk-reward equation to the downside, says Rupak De of LKP Securities. With volatility spiking and key Fibonacci support levels breached, he sees potential for further corrective moves toward 25,000 unless the index reclaims resistance levels swiftly.
Edited excerpts from a chat:
Nifty ended the week lower as IT stocks dragged the index. How do you see the risk-reward changing for the week ahead?
The Nifty opened gap-down amid heavy morning selling in IT stocks, triggered by negative cues from the US markets—particularly the NASDAQ, which was hammered overnight. By the end of the session, the IT index staged a smart recovery from the day’s low; however, the headline index still closed deep in the red. Meanwhile, India VIX, the real villain of the day, moved back above its 200DMA, indicating rising fear and volatility during the session.
The chart setup appears somewhat weak, with the index slipping below its 20DMA for the first time in the last 3–4 sessions. Technically, the index has also fallen below the 38.2% Fibonacci retracement of the prior rally from 24,571 to 26,341.
As the index has closed below the support of 25,500, we expect the Nifty to remain weak with a potential to fall towards 25,000 in the short term. On the higher end, resistance is placed at 25,800.
Nifty IT index ended the week 8% lower as investors remain worried about the impact of AI. Do you see some shorting opportunities here?
The IT index has been witnessing a highly volatile and uneven uptrend. Initially, it delivered a false breakout and then corrected sharply, an abrupt move that caught many off guard. Subsequently, it broke below the support of its rising trendline at 35,400—a level I had highlighted as the “make-or-break” zone in last week’s ET Market View, triggering a steep decline toward 31,422.
In addition, a hidden bearish divergence is visible on the weekly RSI, indicating weakening underlying momentum and reinforcing the cautious outlook for the sector.
Defence stocks are doing well. How would you trade, and do you see more upside?
The defence sector, though limited in participation, maintained relative strength during the week. On the weekly chart, a noticeable spike was observed in the current session, and the index continued to hold above its 20-week SMA, reflecting sustained positive momentum.I expect this constructive sentiment to persist in the short term. Additionally, several stocks within the space are hovering just above their immediate support levels, which could act as a base for further upside if broader market conditions remain supportive.
SBI was among the top weekly gainers. Do you think more upside is left?
SBI has rallied sharply in recent sessions following a consolidation breakout on the weekly chart. The trend remains strong and is likely to sustain in the short term as well.
However, it would be prudent to accumulate the stock in a staggered manner. Dips should be utilised as buying opportunities from a medium-term investment perspective.
Give me your top trading ideas for the week
Sell Indian Hotels | Entry: 700 | Stop Loss: 717 | Target: 670
The stock has formed a lower high on the daily chart, indicating subdued buying interest at higher levels. It has also slipped below its 20DMA, reflecting short-term weakness in trend structure. Additionally, the RSI has developed a hidden bearish divergence, signalling fading momentum.
Given the current technical setup, the stock may remain under pressure in the near term, with potential downside toward 670. On the upside, 717 acts as immediate resistance; a sustained move above this level could negate the bearish bias.
Sell Persistent | Entry: 5,480 | Stop Loss: 5,600 | Target: 5,280
Although the stock witnessed a smart intraday recovery after a gap-down opening, it had earlier broken below its 200DMA, suggesting a negative short-term trend. On the hourly chart, the stock appears to be on the verge of a breakdown. The RSI has also broken below a rising trendline, reinforcing the weakening momentum.
Based on the prevailing technical structure, a bearish view can be drawn, with the price potentially drifting toward 5,280. Immediate resistance is placed at 5,600.
Buy Kirlosker Eng | Entry: 1,379 | Stop Loss: 1,325 | Target: 1,500
The stock has moved above its previous swing high, supported by healthy volumes, indicating strengthening buying interest. The RSI is in a bullish crossover and trending higher, reflecting improving momentum. Additionally, the price has sustained above its 20DMA, supporting the positive bias.
In the short term, the stock may advance toward 1,500. Immediate support is placed at 1,325; a decisive breach below this level could weaken the prevailing uptrend.
