Sharp rally seen for Nifty, Bank Nifty likely to resume uptrend

On Friday, Indian benchmark indices opened on a positive note, aided by favourable global cues, but witnessed a sharp reversal as profit booking intensified amid escalating cross-border tensions between India and Pakistan following the terrorist attacks in Pahalgam, Kashmir. Broader markets saw steeper declines, with the Nifty Midcap100 and Smallcap100 indices falling over 2.5% each. Barring Nifty IT, all sectoral indices ended in the red.

The 30-share BSE Sensex declined 588 points, or 0.74%, to close at 79,212, while the broader NSE Nifty dropped 207 points, or 0.86%, to end at 24,039. During the session, the Sensex fell as much as 1,525 points from its intraday high, while the Nifty shed 518 points from its peak.

Analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, at SBI Securities, interacted with ET Markets regarding the outlook on Nifty and Bank Nifty, along with an index strategy for the upcoming week. Following are the edited excerpts from his chat:

What is your view on markets, given the kind of geopolitical uncertainty on the borders?


The benchmark index, Nifty, extended its upside journey this week, continuing the sharp rally that began from the low of 21,743.65. Over the course of just 12 trading sessions, the index surged more than 2,600 points, reflecting strong bullish momentum. However, this rally hit a brief pause amid anticipated geopolitical tensions between India and Pakistan, triggering a minor setback.

Notably, the throwback was arrested near a key technical support — the neckline of a double bottom pattern, which coincides with the 8-day EMA. This level acted as a cushion, helping the index recover slightly before eventually closing the week at 24039, registering a modest gain of 0.79%. On the weekly chart, Nifty has formed a small-bodied candle with a long upper shadow, a classic indication of selling pressure at higher levels. While the index remains above its short and long-term moving averages, it’s important to note that the slope of short-term averages is flattening, hinting at waning momentum.

From an indicator perspective, the daily RSI remains in bullish territory, though it has started to trend lower, while the MACD histogram has declined for the last two sessions, both suggesting fading bullish strength. Overall, the technical structure indicates that the upside momentum is losing steam, and Nifty is likely to enter a consolidation phase in the coming sessions as the market digests recent gains.

I would like to have your view on Nifty & Bank Nifty. And also, what are the key levels to watch out for right now?


For Nifty, the zone of 24,350-24,380 will act as a crucial hurdle for the index. If the index sustains above the 24,380 level, then we may witness a sharp upside rally upto the level of 24,600, followed by the 24,850 level in the short term. While on the downside, the zone of 23,800-23,750 will act as important support for the index as the 23.6% Fibonacci retracement level of its prior upward move (21,743.65-24,365) is placed in that region. If the index slips below the 23,750 level, then the next crucial support is placed at the 23,350 level.

For Bank Nifty, the zone of 54,200-54,100 will act as immediate support for the index. Any sustainable move below the level of 54,100 will lead to further correction upto the level 53400. While on the upside, the zone of 55,500-55,600 will act as a crucial hurdle for the index. Any sustainable move above the level of 55,600 will lead to the resumption of its northward journey. In that case, the index is likely to test the level of 56,300, followed by 57,000 in the short term.

⁠What are your views on the 2 major sectors - IT & Banking?


Nifty IT is strongly outperforming the frontline indices over the last couple of trading sessions. Most noteworthy, it has surged above its 20-day EMA level for the first time since February 2025. Further, the daily RSI is quoting above 50 mark and it is on an upward trajectory, which is a bullish sign. Hence, we believe the index is likely to continue its outperformance in the short term.

The banking benchmark index, Bank Nifty, has strongly outperformed frontline indices in the last couple of trading sessions. Most noteworthy, during the last week, the index has marked a fresh all-time high in the first three trading sessions of the week. After peaking at 56098.70 on Wednesday, the index experienced a throwback but found support at the 8-day EMA on Friday. However, on a weekly scale, the index has formed a small body candle with upper and lower shadows, reflecting indecision at elevated levels, suggesting the need for caution in the near term.

What are your views on HDFCBANK, ICICIBANK, and Bharti Airtel?


HDFCBANK: The stock has witnessed a minor pullback after testing the level of Rs 1,979. Currently, it is trading above its short and long-term moving averages, which is a bullish sign. The daily RSI is in a bullish zone, but it is edging lower. This technical structure indicates that the stock is likely to slide into a period of consolidation for now.

ICICIBANK: After registering a high of 1436, the stock has witnessed a pullback. The throwback was halted near the 23.6 percent Fibonacci retracement level of its prior upward rally (1265-1436), and it coincides with the 20-day EMA level. Currently, the stock is trading above its short and long-term moving averages, which is a bullish sign. The daily RSI is in bullish territory. Going ahead, any sustainable move above the level of Rs 1,420 will lead to resuming its northward journey.

BHARTIARTL: The stock is witnessing a throwback after testing the level of 1904. Interestingly, during the period of throwback, the volume activity is mostly below average. The daily RSI is slipped below the 60 mark and it is in falling mode, which indicates the throwback is likely to extend. Going ahead, the zone of Rs 1,790-1,780 is likely to act as crucial support for the stock as it is the confluence of 20-day EMA and 50 percent Fibonacci retracement level of its prior upward rally (Rs 1,669-1,904).

⁠What is the recent FII activity suggesting?


Over the last eight consecutive trading sessions, FIIs have emerged as net buyers in the Indian equity markets, signaling renewed confidence in domestic fundamentals. This buying spree reflects positive sentiment towards Indian equities.

In the derivatives segment, the FII long-short ratio in index futures currently stands at 37.63%, suggesting a moderately cautious stance. While it’s not overly bullish, it indicates a gradual unwinding of short positions and buildup of long positions — a sign that FIIs are selectively participating in the uptrend but are still hedging against near-term volatility.

Overall, the FII data points toward a constructive yet balanced approach, where buying interest in cash markets is complemented by a guarded view in futures, indicating optimism with a layer of prudence.

Based on the recently concluded April Expiry, how should one approach and trade the May series with sectors that can potentially outperform or underperform?

Potential Outperforming Sectors based on Roll-Over Data: Private Banks, Financial Services, PSU Banks, Cement, Chemical, Capital Market, Defense, Automobile, Pharma, Healthcare and Oil & Gas.

Potential Underperforming Sectors based on Roll-Over Data: Metal and Realty.

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