According to Axis Securities, the index formed a small bearish candle with a long upper shadow on the weekly chart, indicating temporary exhaustion after the recent rally.
The brokerage believes Nifty is sustaining well above its medium-term downward-sloping trendline, which continues to affirm the overall bullish structure.
“The support zone lies between 25,500–25,300 levels, while a sustained move above 26,000 could trigger buying towards 26,100–26,300 levels,” Axis noted in its weekly report.
The firm expects the benchmark to trade within a 25,500–26,000 range in the coming sessions, with a mixed bias and a positive undertone as long as it holds above key support levels.
On the indicators front, the RSI remains comfortably above its reference line, suggesting momentum still favours the bulls. “The weekly chart shows a healthy consolidation pattern rather than any reversal sign. Investors should continue to adopt a buy-on-dips strategy,” the report added. Market watchers say the brief pullback last week was largely influenced by global and domestic triggers. Puneet Singhania, Director at Master Trust Group, said the market’s tone turned cautious after US Federal Reserve Chair Jerome Powell hinted that a December rate cut was not guaranteed, tempering global risk appetite. “Powell’s comments revived concerns about inflation and delayed the hopes of early monetary easing, leading to short-term profit booking,” he said.
Adding to the nervousness, Sebi’s new guidelines on the methodology and weighting of non-benchmark indices such as Bank Nifty, Bankex, and FinNifty also caused a bout of volatility. The regulator’s move to cap individual stock weights at 20% and restrict the top three constituents to 45% combined triggered rotational flows and sectoral churn, particularly in financial stocks.
Despite the muted headline performance, the market’s internals remained strong last week. PSU Banks, Oil & Gas, and Metals led the gains, while Capital Markets and Healthcare lagged. On the institutional side, Foreign Institutional Investors (FIIs) sold around Rs 2,102 crore worth of equities during the week, but robust Domestic Institutional Investor (DII) inflows of nearly Rs 18,800 crore cushioned the impact and reinforced the market’s underlying strength.
Meanwhile, the Bank Nifty, which had been a key outperformer in October, also ended flat last week as selling pressure in private banks offset gains in PSU counters. The index continues to trade above its near-term moving averages, maintaining a bullish structure.
Overall, the short-term correction appears more like a pause within a larger uptrend than the start of a reversal. Analysts expect sectoral rotation and stock-specific action to dominate trading in the coming sessions, with Canara Bank, HPCL, and SBI Life among Axis Securities’ top picks for the week ahead.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)