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F&O Talk| Nifty kicks off 2026 with fresh all-time high, momentum signals more upside ahead: Sudeep Shah
Expectations around upcoming Q3 results and supportive policy measures in the Union Budget have helped lift overall sentiment. A key factor has been improved participation in the broader market, particularly selective buying in mid-cap stocks.
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 closed in the green on the weekly chart and near its all-time high levels. Do we see the index making a new high on Monday when the market opens?
Indian equities began the calendar year on a robust footing, with the Nifty registering a fresh all-time high. After peaking at 26,325 on December 1, 2025, the index entered a phase of sideways consolidation, with Nifty trading in a narrow range of 633 points, marking its tightest monthly range since August 2023.
Momentum decisively picked up over the past four trading sessions. From a recent swing low of 25,878, the index rallied nearly 450 points, driven primarily by gains in index heavyweight stocks. Reflecting improving participation, Nifty Futures rollover rose to 72.29% in the December series, up from 68.77% in November and marginally above the three-month average of 72.28%, indicating sustained trader interest and a willingness to carry positions forward.
The sharp rally on Friday pushed the daily RSI above the 60 mark, signalling strengthening momentum and the potential for continuation in the near term. Reliance Industries emerged as a key contributor to the upmove, advancing 2.12% during the week.
On the sectoral front, metals outperformed, with the Metal Index surging 5.7% over the week as broad-based buying lifted most constituents. The headline gains, however, were partially offset by a sharp decline in ITC, which fell 13.39% following a government notification announcing a significant hike in excise duty on cigarettes.
Going ahead, considering the current chart structure, the index is likely to continue its upward journey and test the 26,500, followed by 26,700 in the short term. On the downside, the zone of 26,150-26,100 will act as immediate support for the index.
What’s the general view now on the FII activity? Has the Indian market given any trigger to the FIIs to return to us?
The overall view on FII activity remains cautious. Over the last six months, FIIs have been net sellers to the tune of nearly Rs 1.84 lakh crore and this selling has continued despite Indian markets hitting all-time highs, indicating subdued participation. India also underperformed several Asian, European, and US markets in 2025, with FIIs clearly preferring other geographies.
One key overhang is the delay in the India–US trade deal, which has kept foreign investors cautious. Additionally, the sharp appreciation of the US dollar against the rupee, with the rupee nearing the 91 mark in 2025, has impacted FII returns, reducing the attractiveness of Indian assets. Positioning data further reflects this caution, as the FII long–short ratio has consistently remained below 20%, with no major signs of short covering.
However, with Nifty at all-time highs, the upcoming Q3 earnings season and the Union Budget could act as triggers. Strong earnings growth or positive policy signals for foreign investors may help revive FII interest in Indian markets.
Which banking stocks can one look at now?
Bank Nifty has turned structurally strong after breaking out of a downward sloping trendline on the daily chart, followed by a sharp follow-through move that pushed the index to a fresh all-time high of 60,204 on 2nd January. This breakout reinforces the positive bias in the banking space.
Within PSU banks, stocks like Indian Bank, Union Bank, Bank of Baroda, Bank of Maharashtra and Canara Bank look well placed. These stocks have posted fresh daily chart breakouts, with RSI in a rising mode and holding above 60, reflecting strong bullish momentum. The DI+ crossover above DI- on the ADX further confirms improving trend strength. Adding to this, the ratio line in the PSU Bank/Nifty ratio chart has hit a new high, indicating sustained sectoral outperformance.
In the private banking space, HDFC Bank and IndusInd Bank appear attractive. IndusInd has broken out of a downward-sloping trendline, while HDFC Bank has delivered a consolidation breakout. Both stocks trade above key moving averages, and the ratio line of the Private Bank/Nifty ratio chart holding above its 200-DEMA suggests a gradual improvement in relative performance.
There’s no stopping the metal pack these days. How sustainable do you think is this rally is? And do you have any top picks for us?
The metal rally remains structurally strong, but in the near term, it appears stretched. The Nifty Metal index has hit a fresh all-time high of 11,434, gaining nearly 13% since 10th December. The ratio line in the Nifty Metal/Nifty ratio chart has broken out of a horizontal resistance and moved higher, clearly signalling sustained sectoral outperformance. Notably, metals were the top-performing sector in 2025, delivering close to 30% returns.
However, momentum indicators suggest the rally is overheated. The index RSI stands at 83, the highest since October 2024, pointing to an overbought zone. The index is also trading 6% above its 20-day EMA and about 9% above its 50-day EMA, increasing the likelihood of near-term profit booking. While the broader trend remains positive, some consolidation would be healthy before the next leg up.
Among top picks, Hindalco continues to show strong relative strength. Jindal Steel has seen a double-bottom neckline breakout, followed by a solid follow-through, and importantly, held its 200-day EMA, reinforcing long-term bullish structure. Jindal Stainless is consolidating post a range breakout and could resume its upmove on a fresh breakout. Tata Steel rebounded sharply from its 100-day EMA, with RSI above 60, indicating continuation potential in the short term.
What is the view on the auto sector with the companies sharing December 2025 auto sales numbers? And which stocks look poised for further growth in the sector?
The auto sector continues to remain in a strong uptrend, supported by encouraging December 2025 sales numbers. The Nifty Auto index has delivered a horizontal trendline breakout on the daily chart, followed by a strong follow-through move. Auto was also among the top three performing sectors in 2025, alongside metals and PSU banks. Importantly, the index staged a sharp upmove after taking support at its 20-day EMA on 30th December, reinforcing the short-term bullish structure. The ratio line in Nifty Auto/Nifty ratio chart has held its upward sloping trendline and moved higher, indicating continued relative outperformance versus the benchmark.
On the stock-specific front, Maruti Suzuki has broken out of its consolidation range, aided by the Dzire emerging as India’s best-selling car in 2025, surpassing Creta and Nexon. TVS Motor has posted a horizontal resistance breakout, with DI+ crossing above DI- on ADX, signalling strengthening bullish momentum. M&M has broken a downward sloping trendline and closed above the upper Bollinger Band for two consecutive sessions. Overall, the price structure of these stocks looks strong, suggesting further upside potential.
In fact, the Nifty media index is another pocket which has taken a support on its weekly chart and remains somewhat out of the investor radar. What is the scope of growth there and which stocks are likely to drive this growth?
The Nifty Media index has shown early signs of stability after taking support on its weekly chart, with a steady rebound from the 1,390–1,400 zone on the daily timeframe. However, from a relative performance perspective, the space remains under the radar. The ratio line in the Nifty Media/Nifty ratio chart continues to trend lower, highlighting persistent underperformance versus the broader market. This suggests that while the pullback is encouraging, a clear and sustained reversal signal is still required to confirm a durable trend change.
Looking within the index, most media stocks continue to trade below their key moving averages, reflecting the lack of broad-based strength in the sector. At the stock level, Nazara Technologies stands out. The stock has staged a strong rebound from the 200–225 zone and closed at 284 on 2nd January. It now trades above all major moving averages, with rising bullish momentum indicators supporting the move.
Overall, while selective opportunities exist, it would be prudent to wait for stronger confirmation of trend reversal at the index level before turning constructive on the media space as a whole.
Do you have any other sectors in mind that are doing well, where our investors can consider putting their money?
Nifty Oil & Gas: The Nifty Oil & Gas index has delivered a strong breakout by moving above a downward-sloping trendline on the daily chart. This breakout has been accompanied by sharp bullish momentum, indicating renewed buying interest across the sector. All key momentum indicators are firmly aligned in favour of the bulls, suggesting that the positive trend is likely to sustain in the near term.
Nifty Auto: The Auto index has also broken out of its downward sloping trendline and followed it up with a swift upward rally. The daily RSI has surged past the crucial 60 mark, confirming strengthening momentum. At the same time, the MACD histogram is displaying signs of accelerating upside traction. Given this technical setup, the Auto index is well-positioned to extend its gains in the short term.
Nifty PSU Bank: The PSU Bank index has formed a strong base around its 20 day EMA, which acted as a reliable support zone. A sharp rebound from this level helped the index register a fresh all-time high on Friday. With momentum firmly in the bullish camp, the index is expected to continue its upward trajectory over the coming sessions.
Nifty PSE & Nifty CPSE: Both the Nifty PSE and Nifty CPSE indices posted impressive gains last week, significantly outperforming the frontline indices. The Nifty PSE index has given a clear consolidation breakout, reflecting strong accumulation within the broader public sector theme. Given the solid momentum across both these indices, they are likely to extend their northward journey in the next couple of trading sessions.
Beyond these key outperformers, Nifty Private Bank, Nifty Financial Services, and Nifty Metal indices are also displaying sustained bullish momentum. Their technical setups indicate a continuation of the current upward trend in the near term.
On the contrary, the Nifty FMCG index has slipped below an important support level, signalling a potential shift in sentiment. The breakdown suggests relative weakness within the sector, and we expect FMCG stocks to underperform in the short term.
Any preferred stocks?
Technically, TVS Motors, Maruti Suzuki, REC Ltd, PFC Ltd, Bajaj-Auto, Chola Finance, BHEL, Bank India, Bank Baroda, Glenmark, Indian Bank and GMR Airport are likely to extend their upward rally.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
