Nifty consolidates below 25,900 as markets wait for a decisive trigger

In the curtailed week, markets largely consolidated within a narrow range, with Nifty ending the week almost flat with a marginal positive bias. There was a trading holiday on Thursday due to the Mumbai municipal elections. The benchmark index had low participation and remained within the range throughout the period, given the absence of major triggers. Nifty hovered within a tight range of 426.40 points and marked a week high of 25,899.80 and a low of 25,473.40.

India’s VIX edged higher by 4.10% to 11.37, indicating a marginal increase in volatility expectations, although it remains within historically favorable levels. Nifty ended the week with a small gain of 11.05 points (+0.04%).

The index remains in a defined consolidation zone, just below its recent high, showing broad-based behavior without any decisive breakout. Nifty is trading within a horizontal resistance zone near 25,900 as it continues to defend the 100-DMA (25,570) on a closing basis. Structurally, the markets are not in a trend phase and appear to be in a time consolidation, indicating that Nifty is waiting for a decisive catalyst. A sustained rise above 25,900–26,000 could create room for another breakout, while a break below 25,400–25,350 could lead to increasing weakness.

A quiet to cautious start cannot be ruled out for the coming week, unless the index manages to decisively cross 25,900. Key resistance zones are seen at the 25,900 and 26,150 levels, while supports are expected around the 25,500 and 25,200 levels. A breakdown below these levels could bring the 24,700-24,800 zone back into focus.

The weekly RSI stands at 53.31 and remains neutral without showing any bullish or bearish divergence against the price. Either way, it reflects a lack of momentum. The weekly MACD remains below the signal line and shows slightly increased momentum, with a widening histogram, indicating slightly increased downward pressure. The weekly candle is a small bar with shadows at the top, again reflecting indecision near resistance.

From a pattern analysis perspective, the Nifty remains above the descending trendline it has breached. . This horizontal congestion zone creates above-ground supply pressure. On the other hand, the index continues to respect its main moving averages, especially the 50-week MA (24.728) and the 100-week MA (24.234), which act as strong support zones.

Given the technical situation, it is wise to remain vigilant in the coming week. Traders should be cautious about initiating aggressive new long positions unless there is a confirmed breakout above 26,000. A stock-specific approach is advised, with an emphasis on risk management and protecting existing profits. The best way to approach the week ahead is not to chase the index and instead selectively invest in stocks that are relatively strong, leaving the tight stop losses in place. 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 Pharma and Metal indices have rolled within the leading quadrant, and the Nifty IT sector is rotating strongly within the leading quadrant. The Nifty Midcap 100, Financial Services, Banknifty, PSU Bank and Infrastructure Sector Indices are also in the leading quadrant. These groups are likely to perform relatively better than the broader markets.

The Auto Index is the only index that is within the weakening quadrant. While prices may be slowing on the relative front, individual stock-specific moves can be seen within this segment.

The Nifty Energy, Realty and FMCG sector indices appear to be languishing in the lagging quadrant. These groups may perform relatively worse than the broader Nifty 500 Index. The Media and PSE sector indices are also in the lagging quadrant, but are seen improving their relative momentum against the broader markets.

There is no sector within the improving quadrant.

Important Note: RRG™ 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.

(Milaan Vaishnav is CMT, MSTA Consulting technical analyst. Opinions are his own)

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