Speaking to ET Now, Rajani said the recent decline in the Nifty is a “running correction” rather than a trend reversal. Despite slipping over 200 points from its lifetime high, the Nifty continues to trade above its 20-day, 50-day and 100-day moving averages, indicating that the positional uptrend is still intact.
Key Nifty levels to watch
Rajani highlighted 26,100 as a crucial support level for the Nifty. “As long as the index holds above 26,100 on a closing basis, the bullish structure remains valid,” he said, adding that this level should act as a stop-loss for traders holding long positions.
On the upside, the recent peak of 26,373 remains an immediate resistance. A sustained move above this level could open the door for a fresh all-time high, with 26,700 emerging as the next key resistance zone.
He also pointed out that while the headline index has been consolidating, several large-cap stocks continue to make fresh 52-week and all-time highs, suggesting selective strength within the market.
Bank Nifty shows relative strength
In contrast to the broader market, Bank Nifty has been outperforming and remains technically strong. Rajani noted that banking stocks such as ICICI Bank, Axis Bank and Kotak Mahindra Bank are in clear uptrends, supporting the index’s relative strength.
“Bank Nifty is likely to continue outperforming. Traders should hold long positions with a trailing stop-loss of 59,600,” he said. On the upside, 60,450 — the previous session’s high — is a key resistance, a breakout above which could signal further upside.
Trent weak in the short term; Reliance more resilient
Commenting on stock-specific moves, Rajani cautioned traders against Trent following its sharp decline post Q3 updates. The stock fell nearly 8% on heavy volumes, forming lower tops and lower bottoms on weekly charts.
“Technically, Trent looks weak in the short term. Traders should avoid catching a falling knife,” he said, adding that while the stock may be attractive from a long-term investment perspective, near-term momentum remains negative.
In comparison, Reliance Industries appears better placed technically. Despite recent declines, the stock continues to trade above its 100-day and 200-day moving averages, keeping its primary trend positive. “Reliance is likely to find support at lower levels and attempt a bounce, making it relatively stronger than Trent on positional charts,” Rajani said.
Market outlook
Overall, Rajani remains positive on Indian equities, advising investors and traders to stay aligned with the prevailing trend. “Momentum is missing at the index level, but sectoral and stock-specific opportunities remain. A catch-up rally in the Nifty cannot be ruled out if global cues remain supportive,” he concluded.