Despite new highs, momentum is lacking in the market: Vinay Rajani

The domestic market struggled to hold steady on Tuesday as the Nifty fell below levels once seen as firm support. Just a day earlier, the index had hit a new all-time high around 26,330, before retreating sharply as global signals turned unfavorable. Analysts are now warning that while the overall index remains resilient, the broader market continues to show signs of stress.Speaking to ET Now, HDFC Securities’ Vinay Rajani said the pullback was unconvincing. “Yesterday Nifty touched an all-time high at 26,330 odd levels but failed to sustain at higher levels and has in fact fallen and momentum is clearly missing,” he noted. According to him, the main concern is the absence of participation from the midcap and smallcap segments, which have become a “weak link” even as the frontline index is rising.

Rajani emphasized that global sentiment has been a major driving force behind this recent move. “Just because of the global signals, we are on the rise, but as we can see today, yesterday we saw the US market closed in the red and today the Asian markets have also entered the red, so we are correcting with that,” he said, adding that India is still “one of the underperforming countries in the whole of 2025”.

Despite the current pressure, Rajani believes that the Nifty is still maintaining a constructive trend. He pointed to the 20-day exponential moving average as a crucial area. “There is strong support between 25,970 and 26,050… that low is around 25,842, so that should be the stop loss when trading long positions,” he said. For traders, he asserted that “26,000, 26,050 is a strong support… and any long position in Nifty should have a stop loss of 25,840.”

Rajani added that while sentiment is weak, the index is “down, but still not out, as the positional trend is still bullish.” However, he advised avoiding midcaps and smallcaps for now, given the lack of momentum and difficulty in generating alpha in those sectors.

Stock ideas: one long, one short
With the market witnessing a slight pullback, ET Now asked Rajani about options worth considering. He reiterated his preference for PSU banks. “Canara Bank is one of the stocks we like technically, above all moving averages,” he said, adding that indicators remain strong. He recommended a long trade of around ₹153.5, with a stop loss of ₹150 and a target of ₹158.50.

On the short side, Rajani highlights the weakness in aviation. “IndiGo Airlines. Uptrend line has been breached and looks weak,” he noted. He suggested shorting the December futures around ₹5730, keeping a stop loss at ₹5830 and targeting ₹5600.

As the market continues to digest global volatility, analysts believe that defending the 26,000 will be crucial for maintaining the Nifty’s bullish structure. Whether the broader market joins the party remains the bigger question for investors looking deeper into the December series.