Nifty finds support near 25,900; Volatility offers buying opportunities, says Rahul Sharma

Indian equity markets showed signs of recovery with a return of buying interest, but traders should brace for higher volatility in the near term, said Rahul Sharma, Director and Head – Technical & Derivatives Research at JM Financial Services.Speaking to ET Now, Sharma said the Nifty 50 has found short-term support around the 25,900-25,950 zone after recent sharp selling.

Useful outlook: Volatility is high, risk-reward ratios are improving

Sharma noted that despite a strong start in the last session, the broader market structure remains bearish, prompting many retail investors to use rallies as exit opportunities.”However, an encouraging factor is that cash selling by FIIs has not been aggressive despite the sharp correction. In fact, FIIs have been bullish in Nifty futures, indicating a favorable risk-reward ratio for long positions around the 25,000 level,” he said.

From a technical perspective, Sharma believes that the current volatility should be seen as a buying opportunity, with the Nifty having the potential to move back towards 25,500 and even 25,800 once momentum improves.

He warned that the coming sessions could remain choppy due to multiple triggers, including the monthly expiry of derivatives, the ongoing earnings season and the upcoming Union Budget.

Nifty Bank is also in the spotlight

Sharma added that broader index moves, including Nifty Bank, will remain closely linked to overall sentiment and institutional flows. He expects sharp swings in both indices in the coming days, making disciplined trading and risk management crucial.

Stock Ideas: Preference for Defense and PSU Banks

On sectoral opportunities, Sharma highlighted defense as a key theme, citing expectations of higher government spending in the upcoming budget.

Among defense stocks, Bharat Electronics Limited (BEL) stood out on the technical charts.

“BEL has corrected the least in the sector and is forming a cup-and-handle pattern on the daily charts. A breakout could take the stock to ₹455 initially, with a possible value of ₹480 in the next 30 days,” Sharma said.

He sees an upside potential of 15-16% in BEL from current levels, and recommends a stop loss at ₹380.

Moreover, Sharma remains bullish on PSU banks, with names like State Bank of India, Canara Bank and Bank of Baroda. For broader exposure, he suggested the PSU Bank BeES ETF.

Trading and investment view

Sharma said defense and PSU banking stocks have already been selectively bought during the recent volatility and could outperform if the Nifty makes a more meaningful recovery.

“For traders in the next 10 to 15 sessions, both sectors look attractive. From an investment perspective, BEL can also be considered on the buy side,” he said.