F&O Talk| Nifty records third straight weekly loss in tightest range of 321 points since October. What is now in 2026? Sudeep Shah explains

Indian equity markets ended the week on a positive note with the Nifty 50 snapping a four-day losing streak to settle at 25,966.40, making a solid recovery from the key 25,900 level. The recovery was underpinned by broad-based sectoral buying, helped by a sharp recovery in the Indian rupee from its record lows against the US dollar and renewed interest from foreign portfolio investors, who have turned net buyers in the past two sessions.Strong domestic liquidity continues to provide a solid buffer against significant negative impacts, strengthening market stability. Meanwhile, the revival of foreign capital inflows is increasingly seen as a key driver of the next upward move, boosting overall investor sentiment and risk appetite.

With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ET Markets on the outlook for the Nifty and Bank Nifty as well as an index strategy for the week ahead. Below are the edited excerpts from his chat:

Nifty ended the third week with losses but the daily candle seemed to have shown indecisiveness between the Bulls and Bears. What is your vision now?

Last week, the benchmark index Nifty traded within a narrow range of just 321 points, which was the tightest weekly range since the first week of October. However, despite this compressed price action, volatility remained high as the index opened with a gap-up or a gap-down with each trading session. This combination of high volatility and limited margin clearly reflected a phase of indecisiveness, with both bulls and bears refraining from taking aggressive positions. Ultimately, the index settled at the 25,966 level, forming a small candle with shadows on either side – a structure that often precedes a decisive price move, which raises an important question about what the market is preparing for next.

A key technical development during the week was Nifty’s ability to find support near the 50-day EMA, followed by a quick recovery from lower levels. This price behavior has resulted in the formation of an Adam & Adam Double Bottom pattern on the daily chart. Going forward, a sustained break above neckline resistance could act as a trigger for a sharp upward move, but the real clue lies in how the broader market positions itself alongside this setup.

Interestingly, the broader market indices, Nifty Midcap 100 and Nifty Small Cap 100, also showed a strong recovery from their recent lows. Both indices formed small candles with long lower shadows, indicating renewed buying interest at lower levels. In this context, Monday’s trading session will be crucial for the broader market as the next move here could determine whether this recovery remains selective or evolves into a broader rally.

From a level perspective, for Nifty, the neckline resistance zone of 26,050–26,100 will act as a critical hurdle. A decisive move above 26,100 could lead to a sharp upward rally towards 26,300, followed by 26,500 in the short term, while on the downside, the 25,770-25,700 zone is expected to provide strong support due to its confluence with the previous swing low and the 50-day EMA, making these levels the immediate battleground that will set the tone for the market’s next trend phase.

Let’s talk about a broader picture. As the year comes to an end, what do you expect from Nifty in the coming year?

From a technical point of view, the overall chart structure of Nifty remains bullish. The ongoing sector rotation is likely to act as a strong pillar and help the index sustain at high levels. In the near term, Nifty seems well positioned to move towards the 27,000 mark, supported by healthy market breadth and strong price action.On the other hand, the 25500-25400 zone is expected to function as a crucial support area, cushioning any interim corrections and maintaining the broader uptrend.

Let us also know your views about the Bank Nifty. What’s happening here and the key levels to watch.

The banking benchmark index Bank Nifty also moved within a narrow range of 820 points, marking the tightest weekly band since the last week of October. The index forms a Doji candle on the weekly chart, reflecting the indecisiveness among market participants.

Over the past few trading sessions, the index has hovered around the 20-day EMA, and the ongoing consolidation has caused the moving average to lose its typical curvature. Momentum indicators also reflect a sideways undertone, indicating a lack of strong directional conviction.

Going forward, the 58,700-58,600 zone will serve as a key support area as it coincides with the previous swing low. On the upside, the 59,400–59,500 zone will act as a key resistance band for the index. A decisive and sustained break above 59,500 could trigger a sharp upward rally towards 60,200 in the short term.

The indices are now very volatile and also lack a concrete direction. What do you think are the key triggers that can give this market a solid direction?

One of the key catalysts will be the clarity on the India-US trade deal, which the market is closely watching. Any concrete progress or formal announcement on this front could significantly improve sentiment and help stocks develop stronger directionality.

In addition, the market will turn its attention to the Q3 2026 business updates, which will provide insights into demand trends, margin performance and sector-specific resilience. Moreover, the earnings season for major IT service providers, which starts in January, will play a crucial role. Because IT has a substantial weight in the index and often sets the tone for business commentary, these results will play a major role in determining the direction of the market as we enter the new year.

What is the opinion of the IT package, which seems to be performing well these days, especially after Accenture’s results?

In recent weeks, Nifty IT has clearly outperformed the frontline indices, and this strength is also visible on the ratio chart, which is currently at a 108-day high and trending upward – a strong indication of continued outperformance against the broader market.

Technically, the index is trading above all of its major moving averages, and importantly, these averages are trending upward, confirming a continued bullish structure. Momentum indicators also reinforce this view, with both price and momentum showing strong alignment.

Considering these factors, the IT index seems poised to continue its upward trajectory in the coming sessions.

Which sectors are currently in the spotlight?

Technically, sectors like Nifty Auto, IT, Metal and PSU Bank are expected to maintain their outperformance in the near term.

Conversely, Nifty FMCG and Media are likely to underperform, indicating possible underperformance in the near term.

Which stocks do you think would show strength for participation?

From a technical perspective, several stocks are currently showing notable strength and appear well positioned for participation. KEI Industries Limited, One 97 Communications Limited (Paytm), Samvardhana Motherson International Limited, TVS Motor Company Limited, JK Tire & Industries Limited, CEAT Limited, APL Apollo Tubes Limited and Bharat Forge Limited are all showing strong relative momentum and robust chart structures. Their price action, combined with supportive moving averages and improving momentum indicators, signals continued strength and makes them attractive candidates for traders looking for better-performing names in the current market environment.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)