Nifty likely to stay weak, 25,000 seen as key support: Analysts

The Nifty slipped below key averages last week, with analysts flagging a cautious short-term outlook amid weak global cues, disappointing earnings, and reduced activity post Sebi’s Jane Street ban. While 25,000 is emerging as a key support, a rebound depends on reclaiming 25,400. FMCG, power, insurance, and railway stocks are showing relative strength.

Agencies

JATIN GEDIA
TECHNICAL RESEARCH ANALYST, MIRAE ASSET SHAREKHAN

Where is the Nifty headed this week?
The Nifty has closed below the 20-day moving average (25,265), suggesting weakness. It is now approaching the support cluster of 25,088–25,000, which coincides with the 50% Fibonacci retracement level of the 24,508–25,668 rally and the 40-day exponential moving average (25,018). The hourly momentum indicator RSI has slipped below 20, indicating oversold readings.

As per the weekly and monthly option chain, the 25,000 strike put option has the highest build-up, implying support. Considering the above data points, we expect the Nifty to revive its bullish sentiments from the support zone (25,088–25,000) and hence dips towards the support zone can be considered as a buying opportunity.

Failure to hold the support zone could lead to a deeper correction towards 24,700. On the upside, the immediate hurdle is placed at the 25,265–25,345 zone.

Trading Strategies for the Week

After the sharp run-up, the defence and capital market-related stocks are showing signs of profit-booking. Though the medium-term trend is positive, a near-term correction can’t be ruled out. Hence, investors should consider partial profit-booking in these sectors and move towards FMCG, power, and railway sector stocks. Mrs Bector Foods, Marico, NTPC, Power Grid, NHPC, RVNL, and RailTel are some of the stocks which can be considered for short-term investing.

DHUPESH DHAMEJA
DERIVATIVE ANALYST, SAMCO SECURITIES

Where is the Nifty headed this week?
Nifty index concluded the week on a subdued note, continuing its struggle for the second consecutive week to surpass the crucial resistance zone. On Friday, the index decisively broke down from its recent consolidation range and closed below the previous week’s low. From a technical standpoint, the index has breached its 20-day exponential moving average and is now hovering near a critical makeor-break level. This signals a cautious undertone in the trend, with the broader bias tilting towards the bearish side. Momentum indicators, the relative strength index (RSI), reflect waning bullish strength. The RSI closed below the 50-mark for the first time in 3 months. As long as the Nifty remains below the 25,400 mark, the structure stays negative, and short-term pullbacks are likely to face selling pressure. A decisive break below 25,120 could ignite fresh downside momentum, dragging index towards the 24,950–24,850 zone.

Trading Strategies for the Week
Stocks from the FMCG, cement, and insurance sectors are showing relative strength. Dabur, SBI Life, and Ramco Cements are well-positioned for further upside, supported by favourable chart patterns and positive sectoral momentum.

SAMEET CHAVAN
HEAD, RESEARCH, TECHNICAL AND DERIVATIVES, ANGEL ONE

Where is the Nifty headed this week?
The broader trend remains positive but the short-term trend has slightly tilted downwards as prices breached the 20-DEMA, a key average that had been held for a considerable time. Adding to this, the way Bank Nifty is placed at the edge of the crucial ‘rising wedge’ support and a sharp decline in the midcap index does not bode well for the bulls. As far as levels are concerned, 25,000 followed by 24,900 are immediate supports, and on the flipside, if Nifty has to regain any strength, it needs to regain the territory of 25,350–25,500 quite soon.

Trading Strategies for the Week
We like Hindustan Unilever which seems to have come out of its long slumber phase. Stock prices traversed through the sturdy wall 200-SMA. We recommend buying on a decline towards Rs 2,500–Rs 2,480 for a target of Rs 2,650. The stop loss to be placed at Rs 2,380.

On the other hand, HDFC Life has confirmed a breakdown on Friday after prices convincingly slid below the key support of Rs 780. We recommend selling on a bounce towards Rs 770 for a target of Rs 741. The strict stop loss can be placed at Rs 789.