Nifty Support Level of 23,700 Expected to Hold Next Week Amid Overbought Concerns in a Top Performer

Market Outlook: Key Levels to Watch for Nifty 50 and Top Picks for Next Week

In the coming week, Milan Vaishnav, the founder of Gemstone Equity Research & Advisory Services, expects the support of 23,700 to stay defended in the Nifty 50. The opening is likely to be well above the 24,000 mark, with the 23,750-24,000 zone expected to remain defended. The level of 24,500 will be a crucial resistance to watch.

Schneider Electric, which saw a 47% rally in April, is not just overbought but also over-extended, according to Vaishnav. Fresh buying at this point may not come with a good risk-reward ratio, making it a cautious approach for investors.

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Acutaas Chemicals, on the other hand, is in a primary uptrend. A move above Rs 2,600 can lead to a fresh breakout, taking the stock higher while keeping its primary uptrend intact. However, in a worst-case scenario, the stock may consolidate.

The Nifty's charts and indicator behavior suggest that it has ended above its 20-period Moving Average (MA). This implies that the support of 23,700 is likely to stay defended. The major resistance for the Nifty comes in at 24,500.

The crucial levels to watch next week are the zone of 23,750-24,000 for supports and the level of 24,500 for resistance.

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Vaishnav's top two stock picks for next week are Godfrey Phillips and Oil India. Godfrey Phillips has formed a strong base over the past couple of weeks and may see a technical rebound, potentially leading to a trend reversal. Oil India, on the other hand, has broken out from a symmetrical triangle and is expected to move meaningfully higher from current levels.

In terms of sector performance, Vaishnav does not expect to be sector-specific but notes that isolated strong outperformances may come from Pharma, PSE, Auto, Energy, and Realty space.

The Bank Nifty's performance will stay correlated with the Nifty 50, but its relative performance against the Nifty 50 is weak. This may lead to the Bank Nifty relatively underperforming the Nifty on a week-on-week basis for some time.

Finally, the Nifty FMCG index has shown a strong rebound in line with the overall market rebound but has yet to show any signs of a trend reversal. A fresh uptrend would begin only after the Nifty FMCG Index crosses above 53,500.