Speaking to ET Now, Shah said the market has shown strong resilience despite elevated volatility and back-to-back expiry-related pressures in a truncated trading week.
“The week began on a positive note with a gap-up opening, and Nifty has managed to hold that gap, which appears to be a breakaway gap supported by a falling trendline breakout. This indicates the end of the corrective phase,” Shah said.
Key levels to watch on Nifty
Shah highlighted that the Nifty continues to find strong support around its 50-day exponential moving average, near the 25,700 zone. Any decline towards 26,000–25,900 should be seen as a buying opportunity, he added.
“With the broader market structure improving, we expect the index to challenge 26,300 soon. From a medium-term perspective, the setup points towards a Santa rally, with targets of around 26,700 by January,” he said.
He also flagged the inverse relationship between the Nifty and USD-INR movements. Historically, Shah noted, whenever the dollar index hits the upper end of its channel and corrects by 4–5%, Indian equities tend to gain nearly 10% over the subsequent two months.
Bank Nifty shows relative strength
On the banking space, Shah said Bank Nifty continues to outperform, holding firmly above its 20-day exponential moving average despite market volatility.“Bank Nifty is clearly showing relative strength. We expect it to head towards 60,500–61,000 levels by January. The buy-on-dips strategy remains valid, with strong support placed around 58,500,” he said.
IT stocks: Profit booking, not trend reversal
Addressing the underperformance in the IT sector during the session, Shah said the weakness should be seen as routine profit booking following a sharp rally over the past two weeks.
“The Nifty IT index has seen strong gains recently, so the current dip is a healthy retracement. Structurally, we remain positive on the sector,” he said.
Shah added that the ratio chart of Nifty IT versus Nasdaq is near the lower end of its channel, suggesting scope for relative outperformance in 2026.
“Large-cap IT stocks such as TCS, Infosys, Wipro and HCL Tech remain attractive. Dips should be used as buying opportunities rather than reasons to exit,” he said.