Nifty is taking a breather, but analysts see the uptrend still intact. 3 stocks to buy this week

After four consecutive weeks of gains, the Nifty finally took a breather as profit bookings at higher levels weighed on sentiment. The benchmark fell 73 points, or 0.28%, to end the week at 25,722, while the Sensex lost 273 points to end at 83,939. However, the mild decline does not signal a turnaround, with most analysts expecting the market to consolidate before attempting a push towards 26,000 next week.

According to Axis Securities, the index formed a small bearish candle with a long upper shadow on the weekly chart, indicating a temporary exhaustion after the recent rally.

The brokerage believes that Nifty remains well above the medium-term downtrend line, which continues to confirm the overall bullish structure.

“The support zone is between 25,500 and 25,300 levels, while a sustained move above 26,000 could lead to buying towards 26,100 and 26,300 levels,” Axis said in its weekly report.

The firm expects the benchmark to trade between 25,500 and 26,000 in the coming sessions, with a mixed bias and positive undertones, as long as the benchmark remains above key support levels.

In terms of indicators, the RSI remains comfortably above its reference line, suggesting that momentum is still in favor of the bulls. “The weekly chart shows a healthy consolidation pattern rather than any reversal sign. Investors should continue to follow a buy-on-dips strategy,” the report added. Market watchers say last week’s brief pullback was largely influenced by global and domestic triggers. Puneet Singhania, managing director of Master Trust Group, said the market tone turned cautious after US Federal Reserve Chairman Jerome Powell hinted that a rate cut in December was not guaranteed, dampening global risk appetite. “Powell’s comments revived inflation concerns and delayed hopes for early monetary easing, leading to near-term profit booking,” he said.

Adding to the nervousness, Sebi’s new guidelines on methodology and weighting of non-benchmark indices such as Bank Nifty, Bankex and FinNifty also triggered a period of volatility. The regulator’s decision to limit individual stock weightings to 20% and the top three components to 45% combined caused rotation flows and sectoral churn, especially in financial stocks.

Despite the subdued overall performance, internal market data remained strong last week. PSU Banks, Oil & Gas and Metals led the gains, while Capital Markets and Healthcare lagged. On the institutional side, foreign institutional investors (FIIs) sold around Rs 2,102 crore worth of shares during the week, but robust domestic institutional investor (DII) inflows of nearly Rs 18,800 crore cushioned the impact and strengthened the underlying strength of the market.

Meanwhile, the Bank Nifty, which was a key outperformer in October, also ended flat last week as selling pressure in private banks offset gains in PSU counters. The index continues to trade above its short-term moving averages and maintains a bullish structure.

Overall, the short-term correction looks more like a pause within a larger uptrend than the start of a reversal. Analysts expect sector rotation and stock-specific action to dominate trading in the coming sessions, with Canara Bank, HPCL and SBI Life among Axis Securities’ top picks for the week ahead.

Also read: Madhusudan Kela Portfolio: 7 stocks rise to 67% in FY26; new bet revealed in Q2

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