Indian equity markets ended last week under pressure, with benchmark indices struggling to hold gains despite brief recovery attempts during the previous two sessions. Weak technical indicators, continued selling in broader markets, and pressure in heavyweight banking and energy stocks kept sentiment cautious heading into the new trading week.
Speaking to ET Now, Rupak De, Sr Tech Analyst, LKP Securities highlighted that the undertone of the market continues to remain weak, especially after the Nifty once again failed to sustain above key resistance levels.
Responding to the weakness, Rupak De said, “So, definitely, after two green days we are back in the red again. And it found resistance around the previous low of around 23,800 and then it came back to the lower level. And also, it found resistance around its 20 EMA on the daily time frame and 50 EMA on the hourly time frame.”
He further added that the technical structure of the benchmark index is turning increasingly fragile in the near term.
“So overall, Nifty is forming a lower top on the daily as well as on the hourly chart. The chart setup is a bit descending and a bearish setup is forming for the short term. Negativity might prevail, but we have support. Though the support is a bit fragile, we have support at 23,500. Once the support of 23,500 is broken, then we are good to go towards 23,150 and below that also,” he said.
Banking Stocks Add to the Weakness
The banking pack, which often determines the broader direction of the market, also appears vulnerable according to the analyst. He pointed out that Bank Nifty has repeatedly failed to cross important resistance levels over the past few sessions.
“For Bank Nifty, Bank Nifty is also going to support Nifty as for the last two days it has been finding resistance around its 50 EMA on the hourly chart and the chart is a bit bearish and sentiment might remain negative in the short term or till the time it is remaining below 54,500,” he said.
He expects the banking index to remain under pressure in the near term, adding, “On the lower end I expect Bank Nifty to move towards 52,500 kind of level in the near to short term as all the big boys in the banking space are looking very-very bearish.”
Sharp Correction in Smallcaps Raises Questions
The broader market witnessed deeper cuts compared to frontline indices, especially in the smallcap space. The Nifty Smallcap index registered a steep fall for the week, ending its six-week gaining streak and raising concerns among retail investors.
However, despite the correction, Rupak De believes the structural trend in the midcap and smallcap segment remains healthy after the sharp rally seen earlier.
“Smallcap and midcaps have corrected recently significantly. However, if we consider the preceding rally, the preceding rally was spectacular. In fact, Nifty Midcap made a new all-time high in this recent rally just before the current fall,” he said.
He maintained that selective buying opportunities are emerging in the broader market despite near-term volatility.
“So, I would definitely put my money in midcap as well as in the smallcap and though the larger contribution would remain into the largecap, but I would definitely put my significant capital into mid and smallcap,” he added.
Reliance Industries Fails to Inspire Confidence
Among the major laggards during the last week was Reliance Industries, which remained under selling pressure amid weak technical signals.
Rupak De indicated that the stock currently lacks trading comfort on both the long and short side.
“So, Reliance chart is not very tempting. Chart says me to stay away from it because the stock recently has fallen below all the important moving averages and currently it is good to go to make a new low below 1300,” he said.
He also cautioned traders against aggressive short positions after the recent decline.
“So, I would wait and also on the short side I would not be comfortable taking short because it has already fallen by 150 kind of points. So, long or short I would not trade Reliance in the short term,” he added.
FMCG and Pharma Continue to Offer Stability
While broader market sentiment remains shaky, defensive sectors such as FMCG, healthcare, and pharmaceuticals continue to show resilience.
Sharing his preferred trading idea, Rupak De said that Marico stands out on the charts after a phase of consolidation.
“Yes, definitely. Some of the stock which I am liking are like Marico. For the last few days, FMCG, healthcare, and the pharmaceutical stocks are doing good. So, my pick would be Marico,” he said.
He believes the stock could witness an upside breakout once the current consolidation phase ends.
“After the decent rally, the stock has been consolidating for the last three-four days and I expect once the consolidation ends, it is likely to end on the higher end. Upside breakout is expected and on the higher end the stock might move towards 880 in the short term,” he added.
According to him, the stock can be bought around current levels with a stop loss placed below 824.
Jewellery Stocks Remain Mixed
The jewellery segment, which had seen strong investor interest in recent months, is now showing signs of exhaustion in select counters.
Rupak De expressed caution on Kalyan Jewellers, citing continued weakness in the stock structure.
“So, among the jewellery stocks, they are with a mixed view, like Kalyan Jewellers I find the stock is falling towards its low, currently it has corrected significantly, then there was a consolidation, then again it is getting ready for further fall,” he said.
He advised investors to remain cautious, adding, “So, I would be happy if I exit from the stock at the current level because I expect the stock might move towards 330 in the short term.”
