Nifty ended the week lower as IT stocks underperformed the index. How do you see the risk-reward changing in the coming week?
The Nifty opened a gap-down amid heavy morning selling in IT stocks, triggered by negative cues from the US markets – especially the NASDAQ, which came under pressure overnight. Towards the end of the session, the IT index showed a smart recovery from the day’s low; however, the overall index still closed deeply 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 dipping below 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 previous rally from 24,571 to 26,341.
With the index having closed below the support of 25,500, we expect the Nifty to remain weak with a potential to decline towards 25,000 in the near term. On the higher side, resistance is at 25,800.
The Nifty IT index ended the week 8% lower as investors continue to worry about the impact of AI. Do you see some opportunities for shorting here?
The IT index has witnessed a highly volatile and uneven uptrend. Initially producing a false breakout, this was then sharply corrected, an abrupt move that caught many off guard. It then broke below the support of its rising trendline at 35,400 – a level I had marked as the “make-or-break” zone in last week’s ET Market View, leading to a sharp decline towards 31,422.
Moreover, a hidden bearish divergence is visible on the weekly RSI, indicating a weakening in underlying momentum and reinforcing the cautious outlook for the sector.
Defense stocks are doing well. How would you trade, and do you see more upside potential?
The defense sector, despite limited participation, maintained relative strength during the week. The weekly chart saw a notable spike during the current session, and the index continued to hold above its 20-week SMA, reflecting continued positive momentum. I expect this constructive sentiment to continue in the short term. Additionally, several stocks within this space are hovering just above their immediate support levels, which could serve as a basis for further upside potential if broader market conditions remain supportive.
SBI was among the top weekly gainers. Do you think there remains more upside potential?
SBI has recovered sharply in recent sessions after breaking consolidation on the weekly chart. The trend remains strong and is likely to continue in the short term.
However, it would be wise to build up the stock in a staggered manner. Dips should be used as buying opportunities from a medium-term investment perspective.
Give me your best trading ideas for the week
Indian Hotels Sales | Admission: 700 | Stop loss: 717 | Goal: 670
The stock has made a lower high on the daily chart, indicating subdued buying interest at higher levels. It has also fallen below the 20DMA, reflecting short-term weakness in the trend structure. Furthermore, the RSI has developed a hidden bearish divergence, indicating declining momentum.
Given the current technical situation, the stock could remain under pressure in the short term, with potential downside towards 670. On the upside, 717 acts as immediate resistance; a sustained move above this level could negate the bearish bias.
Sell persistent | Admission: 5,480 | Stop loss: 5,600 | Goal: 5,280
While the stock witnessed a smart intraday recovery after a gap-down opening, it had previously broken below the 200DMA, indicating a negative short-term trend. On the hourly chart, the stock appears to be on the verge of a collapse. The RSI has also broken below a rising trendline, reinforcing the weakening momentum.
Based on the prevailing technical structure, a bearish view can be made, with the price possibly drifting towards 5,280. Immediate resistance is placed at 5,600.
Buy Kirlosker Eng | Entry: 1,379 | Stop loss: 1,325 | Goal: 1,500
The stock has risen above its previous swing high, supported by healthy volumes, indicating increasing buying interest. The RSI is in a bullish crossover and is trending higher, reflecting improving momentum. Moreover, the price has remained above 20DMA, supporting the positive bias.
In the short term, the stock could rise towards 1,500. Immediate support is placed at 1,325; a decisive break below this level could weaken the prevailing uptrend.
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