Market volatility sentiment driven, not yet structural collapse: Vinay Rajani

The ongoing volatility in Indian equities is largely sentiment-driven rather than structurally weak, with the benchmark index stuck within a tight consolidation band for over a month, said Vinay Rajani, AVP and Senior Technical & Derivative Analyst at HDFC Securities.Speaking to ET Now, Rajani said that the market has remained within a certain range for the past five consecutive weeks, which is a result of indecision rather than a trend reversal.

Nifty is stuck in narrow consolidation

Rajani highlighted that the benchmark index is hovering in a 500-point band, with resistance near 26,200 and support around 25,700.

“The market is not finding any momentum or clear direction. This consolidation phase has continued despite multiple attempts to break out,” he said.

He added that the 50-day exponential moving average (EMA) near 25,834 has emerged as a crucial support level. “We have already seen two sharp reversals from this zone in December, and the index is approaching it again,” he noted.

Market breadth a short-term concern

While broader sentiment remains subdued, Rajani warned that the advance-to-decline ratio is not supportive, pointing to weak market breadth.

“That is a concern, but consolidation phases are often limited in scope. A reversal can still happen at any time,” he said, adding that selective stocks continue to show strength despite the lack of index momentum.

Important levels to watch

Rajani said traders should closely monitor the 25,700 level on a closing basis.

“As long as the 25,700 level holds, the possibility of an upward reversal remains intact. A decisive move above 26,150 would be an early signal of renewed bullishness,” he said.

He advised traders to hold long positions with strict stop losses at the bottom of the range.

Stock choice: Selective opportunities arise

Despite the troubled market, Rajani sees safe spots in select stocks that are showing new technical strength.

Jindal stainless:

The stock has shown another breakthrough with rising volumes and resilience during market downturns. Rajani recommends buying around ₹815, with a stop loss of ₹790 and a short-term target of ₹850.

UPL:

UPL is trading near its all-time highs and continues to outperform the broader chemicals sector. Rajani suggests buying around ₹778-779, keeping a stop loss at ₹764 and targeting a positive price of ₹850.

Outlook

Rajani summarized the current market phase as one of patience and discipline. “Momentum is lacking, but the consolidation itself is not bearish. Traders should remain selective, respect key levels and focus on stocks showing relative strength rather than chasing the index,” he said.