Dalal Road Week: Nifty eyes breakout above 25,550 as auto, metallic, PSU banks lead momentum

The markets traded with a constructive bias all through the week as Nifty continued its upward drift whereas staying inside an outlined vary. The index oscillated in a slim band of 448.70 factors, transferring between 24,881.65 and 25,330.75. Regardless of intra-week volatility, the index managed to put up a web achieve of 391.10 factors, or 1.57%, on a weekly foundation. India VIX inched marginally larger by 0.42% to 10.10, persevering with to hover close to its multi-month lows.

The present technical setup displays a market within the strategy of difficult a key resistance zone. Nifty has moved nearer to the apex of a giant symmetrical triangle formation that has been creating since late 2024. The higher trendline of this triangle, which has provided stiff resistance in previous cases, is now being examined as soon as once more. The index stays in a broad consolidation zone, and until a breakout above 25,550– 25,600 is confirmed, the broader market will proceed to exhibit rangebound behaviour. The bias stays mildly bullish, however a decisive transfer past this resistance zone, supported by robust volumes, shall be important to substantiate a recent breakout. In the meantime, world developments—notably escalating US-China commerce tensions and renewed semiconductor provide chain issues—might set off risk-off sentiment if geopolitical dangers escalate.

For the approaching week, the markets may even see a tepid or cautious begin, particularly in gentle of the worldwide macro issues. Quick resistance is anticipated at 25,400, adopted by 25,580, which additionally aligns with the higher Bollinger Band. On the draw back, helps are seemingly close to 25,000 and 24,850 ranges.The weekly RSI stands at 57.13 and stays impartial, displaying no divergence towards worth. It maintains a bullish bias whereas staying beneath overbought ranges. The MACD is beneath the sign line however narrowing, suggesting that whereas momentum stays constructive, it isn’t strengthening aggressively. No important candlestick sample was noticed this week, although the shut close to the resistance could also be interpreted as a check of power.

From a sample perspective, Nifty stays inside a long-standing symmetrical triangle formation, oscillating between converging trendlines. This sample has traditionally led to robust directional strikes upon decision. The index additionally continues to commerce effectively above all key transferring averages (20-, 50-, 100-, and 200-week), which reinforces a bullish undertone. Nevertheless, the narrowing vary and flattening Bollinger Bands counsel {that a} main transfer may very well be within the offing quickly—directional readability will emerge solely on a confirmed breakout or breakdown.

Given the setup, a balanced and stock-specific method is warranted for the week forward. Whereas the broader construction leans constructive, merchants ought to stay conscious of the essential resistance the Nifty is testing. Safety of earnings turns into important at larger ranges, and aggressive lengthy positions needs to be prevented till a breakout is confirmed with follow-through power. The perfect technique to method the approaching week can be to path earnings, keep tight cease losses, and keep stock-specific whereas monitoring macro triggers intently.

In our take a look at Relative Rotation Graphs, we in contrast numerous sectors towards the CNX500 (NIFTY 500 Index), representing over 95% of the free-float market cap of all of the listed shares.

Relative Rotation Graphs (RRG) present that the Nifty Auto, Steel, and PSU Financial institution Indices are the one teams which are contained in the main quadrant. These teams are prone to proceed to comparatively outperform the broader Nifty 500 Index.

The Nifty Midcap 100 Index stays contained in the weakening quadrant. This may increasingly see relative efficiency from the broader markets slowing down a bit.

The Nifty Commodities Index has rolled contained in the lagging quadrant. The Monetary Companies, Consumption, Vitality, Companies Sector, and Media Indices languish contained in the lagging quadrant. The Infrastructure, PSE, and Realty Sectors are additionally contained in the lagging quadrant, however they’re enhancing on their relative momentum towards the broader markets.

The Nifty Pharma and FMCG Indices are contained in the enhancing quadrant. Nevertheless, they’re giving up on their relative momentum and heading again in the direction of the lagging quadrant. The IT Index is contained in the enhancing quadrant. This group may even see improved relative efficiency towards the broader markets over the approaching days.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of EquityResearch.asia and ChartWizard.ae and is predicated in Vadodara. He may be reached at milan.vaishnav@equityresearch.asia)