Chartist Predicts Continued Growth for Sectoral Index: Two Stocks to Watch for Next Week

Market Update: Indian Equity Markets

Key Highlights

• The Nifty India Defence index is well positioned to continue its northward journey in the short term, with dips likely to attract buying interest.
• The ratio chart of Nifty India Defence versus Nifty has broken above a downward sloping trendline on the daily timeframe, indicating a fresh phase of relative outperformance.
• ABB India and National Aluminium Company (NALCO) are expected to perform well in the near term.

Market Trends

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• The domestic equity markets experienced a volatile week, influenced by rising geopolitical tensions between the United States and Iran.
• The Nifty 50 witnessed sharp fluctuations throughout the week, with each trading session opening either with a gap-up or gap-down.
• Brent crude oil prices climbed to their highest level in 85 weeks, and the Indian rupee weakened significantly.

Technical Analysis

• The Nifty 50 has declined by more than 7% from its recent record highs, indicating a phase of profit booking triggered by global uncertainties.
• The index has declined below several important short-term and medium-term moving averages.
• Momentum indicators continue to paint a cautious picture, with the daily RSI below 40 and the daily MACD trading below both the zero line and its signal line.

Support and Resistance Zones

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• The 24,350–24,300 zone is expected to act as a crucial support area.
• A decisive and sustained breach below 24,300 could accelerate the downside move, potentially pushing the index towards 24,000 and subsequently 23,800.
• The 24,800–24,850 range is likely to serve as an immediate resistance zone.

Recommendations

• A sell on rally approach is recommended considering the current chart structure and overall market setup.
• The Bank Nifty is expected to continue its downward trend, potentially breaking its long-term moving average, the 200-day EMA.