Edited excerpts from a chat:
Nifty ended the week around 1% lower as IT stocks dragged the index down. How do you see the market developing in the first week of March?
After persistently avoiding an outage despite multiple attempts throughout the month, the 200-day SMA finally failed on the last business day of the month. This has raised concerns about a retest of the February lows at 24571. However, with the first test of the lower Bollinger band, with supertrend support at 25033 within reach, we are hopeful of a recovery in the second half of the week. However, a slip past the 25,000 region could doom the prospects of a near-term recovery. That said, oscillators have yet to signal an outright collapse.
In the last 3 days, Nifty IT has been trying to climb higher. What do you think is a dead-cat bounce or a sustainable uptrend? Is it too early to say that IT stocks have bottomed out?
Over the past few sessions, Nifty IT’s rebound has been looking more like a technical recovery than the start of a sustainable uptrend. The index recently hit a new 52-week low near 29875, and despite a small increase, it continues to trade below the major moving averages, confirming a bearish stance.
On the daily chart, the price remains below the immediate resistance at 31100-31300, and only a decisive move above 33200-34400 would indicate a structural trend change. Until then, rallies are vulnerable to selling. The weekly chart reinforces this weakness, with the index breaking away from a recent H&S structure, marking a clear bearish phase.
Looking at seasonality, the last fifteen years show that March has on average been net negative for the Nifty IT Index, with a low win rate of just 40% and relatively high volatility, forming a bearish cloud over the sector. Against this background, it is too early to determine a bottom. For a meaningful trend reversal, the index needs to protect 30,000, form a higher low and stay back above 33,200-34,400.Therefore, the recent upswing in Nifty IT is likely to be a dead-cat bounce rather than the start of a new uptrend. The sector is still in a deep correction phase, without a confirmed bottom yet. We will wait for the price to regain key resistance zones before considering any rise as the start of a lasting reversal.
Have we seen shorts end in IT stocks in the last three trading sessions?
While the first two sessions of the new series saw short covering in several equity futures, key index constituents such as TCS, Wipro and Tech Mahindra lost momentum on Friday. About 60% of near-ITM and OTM call option strikes saw new short additions, indicating caution at higher levels. Additionally, nearly 60% of stock futures recorded a short build on Friday, and nearly 80% showed a short week-over-week increase. Overall, the derivatives landscape suggests that traders remain unconvinced by the recent pullback and may be slightly positioning themselves for further downside before considering new bullish exposure.
Metals do well. What do the graphs tell you?
On the daily chart, the Nifty Metal Index is consolidating just below the resistance zone of 12450-12500, marked by multiple failed attempts to move higher. Candles show tight price action near the upper band of the previous rally, indicating buyers are still active but facing supply overhead. The trend structure remains positive, with prices remaining above short-term moving averages and maintaining higher lows. However, the final red candle and a mild rollover in the MACD histogram indicate a short-term loss of momentum, which warrants caution if the 12150-12200 is breached.
On the weekly chart, the index showed a strong medium-term uptrend after breaking above previous swing highs with growing bullish candles. The price continues to move in the green cloud zone, reflecting healthy trend strength. The increased volumes in recent weeks strengthen the possibility of institutional participation.
Looking at the derivatives picture, mixed signals emerge. About 80% of metal stock futures were short on Friday, while roughly 60% added long positions week over week. Additionally, nearly 80% of near-OTM call option strikes on Friday had a short build-up. All told, F&O traders appear to be positioning themselves for some near-term negativity
So expect short-term weakness, but a decisive weekly close above 12,500 could trigger the next leg higher.
Tejas was the biggest winner of the week. How would you trade the stock now?
The steepness of the rise over the past two days and the approach to near-term resistance at 441 increase the likelihood of a break. However, we believe the stock is poised for bigger gains, supported by a limited breakout and bullish continuation patterns, with a short-term target range of 522-533 forecast. Stop loss can be placed near 389 or 376.
Give us your best ideas of the week.
PARAGMILK (CMP: 202)
View: buy
Goal: 222 – 235
Stop loss – 187The weekly chart shows the stock in a correction phase after a sharp decline from the 360-380 region. The price has now dropped towards a key support zone around 180-190, which closely aligns with the 200 WMA, historically a strong long-term support area. The Doji candle on the weekly scale reflects a slowdown in bearish momentum, indicating early signs of stabilization as buyers try to defend this level.
Despite the correction, the broader trend structure from mid-2023 to 2025 still reflects a sequence of higher highs and higher lows, keeping the longer-term uptrend intact.
The weekly MACD histograms have returned in favor of buyers. A flattening or upward turn in the MACD line would serve as the first confirmation of renewed strength.
Overall, the stock is at a critical support point that warrants a pullback to 225-235, while a decisive close below the 200-week moving average could open downside potential towards 160.
HEG (CMP: 578)
View: buy
Goal: 625
Stoploss – 560HEG is showing a steady medium-term uptrend on the weekly chart, supported by consistently higher lows since mid-2024. The price remains well above the 200 WMA, indicating strong long-term structural strength. Recent candles are showing tightening consolidation between 540 and 600, indicating the stock is building energy for its next price move.
The latest bounce at the lower end of this range reflects active dip buying, keeping the overall bias positive as long as stocks remain above 560-40. A decisive weekly close above 600 would confirm a continuation of the breakout and open the way to higher targets.
The weekly MACD remains slightly positive but flat, implying that momentum is still neutral and waiting for a trigger.
Overall, HEG remains in a constructive position. Holding above support and breaking 600 with volume would strengthen the bullish situation.
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