F&O Talk| Nifty logs 3rd straight weekly loss in tightest 321-pt range since Oct. What lies in 2026 now? Sudeep Shah explains

Indian equity markets wrapped up the week on a positive note, with the Nifty 50 snapping a four-day losing streak to settle at 25,966.40, firmly reclaiming the key 25,900 level. The rebound was underpinned by broad-based sectoral buying, aided by a sharp recovery in the Indian rupee from its record lows against the US dollar and renewed interest from foreign portfolio investors, who turned net buyers over the last two sessions.

Strong domestic liquidity continues to provide a solid cushion against significant downside, reinforcing market stability. Meanwhile, the resurgence of foreign capital inflows is increasingly being seen as a key driver for the next upward move, bolstering overall investor sentiment and risk appetite.

With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ET Markets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Nifty ended the 3rd week in losses, but the daily candle seemed to have shown indecision between the Bulls and Bears. What is your view now?

Last week, the benchmark index Nifty traded within a narrow range of just 321 points, which was the tightest weekly range recorded since the first week of October. However, despite this compressed price action, volatility remained elevated, as the index opened with either a gap-up or gap-down on every trading session. This combination of high volatility and narrow range clearly reflected a phase of indecision, with both bulls and bears refraining from taking aggressive positions. Eventually, the index settled at the 25,966 level and formed a small-bodied candle with shadows on either side — a structure that often precedes a decisive directional move, raising an important question about what the market is preparing for next.

A key technical development during the week was Nifty’s ability to find support near its 50-day EMA, followed by a swift rebound from lower levels. This price behaviour has resulted in the formation of an Adam & Adam Double Bottom pattern on the daily chart. Going ahead, a sustainable breakout above the neckline resistance could act as a trigger for a sharp upside move, but the real clue lies in how the broader market is positioning itself alongside this setup.

Interestingly, the broader market indices, Nifty Midcap 100 and Nifty Small Cap 100, also staged a strong recovery from their recent lows. Both indices formed small-bodied candles with long lower shadows, indicating renewed buying interest at lower levels. In this context, Monday’s trading session becomes crucial for the broader market, as the next move here could determine whether this rebound remains selective or evolves into a broader-based rally.

From a level’s perspective, for Nifty, the neckline resistance zone of 26,050–26,100 will act as a critical hurdle. A decisive move above 26,100 could lead to a sharp upside rally towards 26300, followed by 26,500 in the short term, while on the downside, the 25,770–25,700 zone is expected to provide strong support due to its confluence with the prior swing low and the 50-day EMA making these levels the immediate battleground that will set the tone for the market’s next trending phase.

Let's talk about a broader picture. With the year coming to an end, what is your expectation from Nifty for the upcoming year?

From a technical standpoint, the overall chart structure of Nifty continues to remain bullish. The ongoing sectoral rotation is likely to act as a strong pillar of support, helping the index sustain at elevated levels. In the near term, Nifty appears well-positioned to move toward the 27,000 mark, supported by healthy market breadth and strong price action.

On the downside, the 25500–25400 zone is expected to function as a crucial support area, cushioning any intermediate corrections and maintaining the broader uptrend.

Let's get to know your view on the Bank Nifty also. What is happening here, and the key levels to watch.

The banking benchmark index Bank Nifty also moved within a narrow 820-point range, marking its tightest weekly band since the last week of October. The index has formed a Doji candle on the weekly chart, reflecting indecision among market participants.

Over the past few trading sessions, the index has been hovering around its 20-day EMA, and the ongoing consolidation has caused the moving average to lose its typical curvature. Momentum indicators likewise reflect a sideways undertone, indicating a lack of strong directional conviction.

Going forward, the 58,700–58,600 zone will serve as an important support area, as it coincides with the previous swing low. On the upside, the 59,400–59,500 zone will act as a key resistance band for the index. A decisive and sustained breakout above 59,500 could trigger a sharp upside rally toward 60,200 in the short term.

The indices are very volatile now and also lack a concrete direction. What are the key triggers that you think can give this market a solid direction?

One of the most important catalysts will be the clarity on the India–US trade deal, which the market has been tracking closely. Any concrete progress or formal announcement on this front could significantly improve sentiment and help equities establish a stronger directional bias.

Beyond this, the market will shift its attention to the 3QFY26 business updates, which will offer insights into demand trends, margin performance, and sector-specific resilience. Additionally, the earnings season for largecap IT services companies, set to begin in January, will play a critical role. Since IT carries substantial weight in the index and often sets the tone for corporate commentary, these results will be instrumental in shaping market direction as we step into the new year.

What's the view on the IT pack, which seems to be performing well these days, especially after Accenture's results?

Over the past couple of weeks, Nifty IT has clearly outperformed the frontline indices, and this strength is also visible on the ratio chart, which is currently at a 108-day high and trending upward — a strong indication of continued outperformance relative to the broader market.

On the technical front, the index is trading above all its key moving averages, and importantly, these averages are sloping upward, confirming a sustained bullish structure. Momentum indicators, too, are reinforcing this view, with both price and momentum showing strong alignment.

Considering these factors, the IT index appears poised to extend its upward trajectory in the coming sessions.

Which sectors are in the limelight right now?

Technically, sectors such as Nifty Auto, IT, Metal, and PSU Bank are expected to maintain their outperformance in the short term.

Conversely, Nifty FMCG and Media are likely to lag behind, indicating potential underperformance in the near term.

Which stocks would you say are displaying strength for participation?

From a technical standpoint, several stocks are currently demonstrating notable strength and appear well-positioned for participation. KEI Industries Limited, One 97 Communications Limited (Paytm), Samvardhana Motherson International Limited, TVS Motor Company Limited, JK Tyre & Industries Limited, CEAT Limited, APL Apollo Tubes Limited, and Bharat Forge Limited are all showing strong relative momentum and robust chart structures. Their price action, combined with supportive moving averages and improving momentum indicators, suggests sustained strength and makes them attractive candidates for traders looking to engage with outperforming names in the current market environment.

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