Dalal Street Week Ahead: Protect Gains, Avoid New Longs Until Key Levels Hold

Markets traded within a relatively narrower range all week, with a clear negative bias, and ended lower. After opening at the upper end of the range, Nifty attempted an early push towards 26,009 but failed to sustain the move and gradually drifted lower. Selling pressure increased towards the second half, dragging the index to a weekly low of 25,444 before settling at the lower end of the range. The index oscillated within a band of 565 points. India’s VIX rose sharply by 11.33% to 13.29, reflecting an increase in volatility and some nervousness creeping back into the system. Nifty ended the week with a net loss of 222.60 points (-0.87%).

The broader structure still shows a market that is in a medium-term uptrend but is currently undergoing a corrective phase within that trend. On the weekly chart, Nifty has fallen below the 20-week moving average (25,728) and is hovering above the 50-week MA (24,931), putting it in a critical intermediate support zone. The price action over the past few weeks appears to be in a mild distribution phase near the recent highs, and the index is now testing the lower bound of the descending trendline. The 24,900–24,950 zone remains a key support area on a closing basis; a sustained break below this band could open the door for a deeper retracement towards the 24,350–24,400 region. On the upside, only a decisive move back above 25,800-26,000 would negate the immediate weakness and restore price strength.

Markets are likely to get off to a cautious and potentially volatile start this coming week, with the VIX rising and the index closing close to its weekly low. The immediate resistance levels are set at 25,728 (20 week MA) and 26,000. Key supports come in at 25100 and 24,950. The weekly RSI stands at 50.17, having fallen below recent highs and is now in neutral territory; there is no visible bullish or bearish divergence on the price at this time. The weekly MACD remains above the zero line but is below the signal line, indicating a loss of upside momentum. The latest candle is a bearish body after a phase of hesitation near the highs, indicating growing supply at higher levels.

From a pattern perspective, the index appears to be forming a near-term top structure after failing to hold above recent highs. The inability to stay above the upper Bollinger Band and the subsequent drift towards the middle band reflect the waning momentum. The 50-week MA at 24,931 and the 100-week MA at 24,359 form a layered support cluster below current levels, while the 200-week MA continues to rise, underscoring that the long-term trend remains intact despite near-term pressure.

Given this design, a measured and stock-specific approach is recommended. Traders should avoid aggressive new long positions until the index either decisively reclaims 25,800 or retests and stabilizes around the 24,900–24,950 support zone. Protecting existing profits must take priority over chasing momentum. The week ahead will require disciplined risk management and selective participation rather than broad, aggressive positioning. In our look at Relative Rotation Graphs®, we compared several sectors to the CNX500 (NIFTY 500 Index), which represents more than 95% of the free-float market capitalization of all listed stocks.

Relative Rotation Charts (RRG) show that the Nifty PSE Sector Index has rolled within the leading quadrant. Additionally, even the IT index is in the leading quadrant but is seen to be giving up its relative momentum soon. The other sector indices that are in the leading quadrant are the services sector, Bank Nifty, PSU Bank, metals and financial services indices. These groups can perform relatively better than the broader group
markets.

The Auto and the Midcap 100 Index are in the weakening quadrant. The Infrastructure Index is also in this quadrant, but is improving its relative momentum.

The Nifty Pharma Index has entered the lagging quadrant. While the FMCG index is languishing in the lagging quadrant, the Realty Index is improving its relative momentum.

The media and energy indices are placed in the improving quadrant. Important Note: RRGTM charts show the relative strength and momentum of a group of stocks. In the chart above, they show relative performance against the NIFTY500 Index (broader markets) and should not be used directly as buy or sell signals.