Meanwhile, the volatility gauge India VIX ended at 19.71, up 6.03% from the last close.
Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:
Q: A relatively bad week, but April is expected to end on a positive note unless anything dramatic happens. What do you see on Nifty charts in terms of bulls’ positioning, and what levels should investors/traders watch out for?
The pace of the pullback rally, which started from the recent low of 22182, has slowed down considerably over the last week. After witnessing a sharp and swift recovery from lower levels, the benchmark index Nifty has entered a phase of correction and consolidation. The index slipped below the 23,900 level and ended the week with a loss of 1.87%, indicating some profit booking after the strong rebound. A major drag in last week’s decline came from the Nifty IT index, which corrected sharply by 10.31%, primarily due to disappointing Q4 earnings, weaker management commentary, and concerns over near-term growth visibility. But the bigger question now is: Has this correction created a fresh opportunity, or is there still more pain ahead?
Technically, Nifty has now slipped below both its 20-day and 50-day EMA levels, reflecting short-term weakness in momentum. However, it did witness a minor pullback from lower levels during the last hour of the final trading session. Most importantly, the daily RSI failed to cross the 60 mark and has now slipped below its 9-day average, which indicates fading bullish momentum. At the same time, the MACD histogram has been declining continuously for the last five trading sessions, further highlighting the loss of strength in the ongoing pullback rally.
These technical factors suggest that the index is likely to witness a range-bound movement over the next couple of trading sessions rather than any strong directional move. Additionally, weakness in the IT space and relative strength in the Banking space are creating a balancing effect on the index, which may keep Nifty within a broader range. Since both IT and Banking carry significant weightage in Nifty, divergence between these sectors is likely to restrict sharp moves on either side. Meanwhile, stock-specific action is expected to remain strong in the short term, offering selective opportunities despite index consolidation.
Talking about crucial levels, the zone of 23,700–23,650 will act as an important support area for the index, as the 38.2% Fibonacci retracement level of the prior pullback rally (22,181–24,601) is placed in this region. If the index slips below the 23650 mark, the next crucial support is seen around 23,300. On the upside, the zone of 24,200–24,250 will act as an immediate hurdle, and only a sustained move above this range can revive fresh bullish momentum in the near term. The battle between support and resistance is now set—who wins this round will decide the market’s next big move.
Q: Monthly expiry is due this week, so how should traders strategise for Nifty and Bank Nifty trades?
After a sharp rally, Nifty has corrected over the last 3 sessions, indicating profit booking and long unwinding at higher levels.
Option data suggests strong call writing near 24,200 and put writing around 23,800. Hence, we recommend a short iron condor strategy, as Nifty is likely to oscillate within this range.
This involves Nifty Short Iron Condor with selling 23750 PE and 24,150 CE, while buying 23650 PE and 24,250 CE as hedges.
Traders will profit if Nifty expires within the 23,696 – 24,204 range with a maximum profit of Rs 3,640. A breach on either side of the range may result in losses, with a maximum loss of Rs 2,860 per lot.
Q: With the US announcing an indefinite ceasefire, market volatility has eased this week. However, weak earnings from banks and IT have failed to boost investor confidence, with the IT index down 10% and Nifty Bank slipping over 1%. What is your advice to investors?
Despite lower global volatility following the US ceasefire announcement, domestic markets have struggled to gain traction due to weak earnings from IT stocks. The Nifty IT index corrected sharply by 10.31% last week amid disappointing Q4 results, cautious management commentary, and poor near-term growth visibility. The index is trading below key moving averages, with momentum indicators clearly pointing to continued bearish bias.
In contrast, the banking space is showing relatively better resilience, creating a divergence between the two heavyweight sectors. This uneven sectoral performance is likely to keep Nifty range-bound in the near term, as sharp moves on either side may remain limited. Investors are therefore advised to adopt a cautious, stock-specific approach—avoiding IT for now and selectively focusing on relatively stronger pockets of the market amid ongoing consolidation.
Q: What should be the strategy to trade RIL in Monday’s trade in the backdrop of its earnings?
Reliance Industries Limited has been hovering around a crucial support zone of 1,340–1,330 on the daily chart since April 8. This level has historically acted as a strong demand zone, with multiple rebounds seen since September 2025. Recently, the stock faced rejection near its 20-day EMA and drifted lower. Momentum indicators remain weak, with MACD below the zero line and DI- positioned above DI+, indicating bearish undertones. For Monday’s trade, holding above 1,330–1,340 is critical. A breakdown below this zone could trigger further downside, while stability above it may lead to a short-term bounce.
Q: There has been a strong resurgence in smallcap stocks in the past month after a near washout in 2025. Do you expect higher traction in this segment going ahead, and where can one look for opportunities?
The broader indices have been strongly outperforming the frontline indices since the last couple of trading sessions. In the last week, the Nifty Smallcap 100 also managed to close the week on a flat note, while the Nifty Midcap 100 ended with a marginal loss of 0.87%. On a weekly scale, both indices have formed small-bodied candles, indicating consolidation after the recent up move.
From a technical standpoint, both indices are currently trading above their key moving averages, which are trending higher, signalling a healthy underlying trend. Momentum indicators continue to reflect bullish undertones, suggesting that the broader market strength remains intact. Considering these factors, the midcap and smallcap segments are likely to continue their outperformance in the short term.
Q: Metals continue to outshine most of their peers and index returns have now swelled up to over 40% in a year. Do you think they have shed their cyclical tag and can be the next defensive play given geopolitical uncertainty is a new normal now?
The Nifty Metal index has been a strong outperformer in the past year and is trading near its all-time high. Technically, the sector remains bullish as it is trading above all key moving averages, while momentum indicators like RSI and MACD continue to support strength. However, metals remain inherently cyclical as they are closely linked to global growth, commodity prices, and China’s demand outlook. While it may not become a traditional defensive sector, rising geopolitical uncertainty and supply disruptions are making metals an attractive tactical hedge and a strong strategic allocation.
Q: Elecon Engineering, Himadri Speciality and Data Patterns were among the top gainers this week, while HCL, Mphasis and Tech Mahindra have been big losers. What should investors do with them?
Elecon Engineering:
The stock has given a downward sloping trendline breakout and continues to trade well above its key short- and long-term moving averages. A rising ADX signals strengthening trend momentum. As long as it sustains above the 480–475 zone, the bullish trend is likely to persist.
Himadri Speciality (HSCL):
The stock has delivered a decisive breakout from its 534–419 consolidation range, backed by strong volumes. Widening DI lines in the ADX indicate clear bullish dominance. Holding above the 535–530 zone keeps the structure positive for further upside.
Data Patterns:
A horizontal trendline breakout supported by healthy volumes signals strength. Rising MACD histogram bars point to improving momentum, while a close above the upper Bollinger Band indicates volatility expansion. As long as it holds above 3,700–3,650, the bullish bias remains intact.
HCL Technologies:
The stock has broken below its key support at 1,298 and closed weak. RSI slipping below 40 reflects increasing bearish momentum, with prices trading below key moving averages. Till the stock trades below 1,300–1,350, the weakness is likely to continue.
Tech Mahindra:
A breakdown from an upward-sloping trendline signals a trend reversal. RSI has slipped below 40, and DI- crossing above DI+ confirms a strong bearish presence. As long as it trades below 1,400–1,450, the trend remains under pressure.
Mphasis:
The stock has corrected nearly 12% from its 100-day EMA. A falling RSI and bearish DI crossover indicate sustained selling pressure. Till it trades below 2,300–2,350, the outlook remains negative.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)