Speaking to ET Now, Srivastava said the index has formed multiple bottoms near the 25,800 zone, indicating strong support. “This could be yet another base formation. From here, the Nifty should attempt a move towards the trendline resistance around 26,500, which has capped rallies since October and November,” he said.
26,500 Key Level for medium-term trend
Srivastava believes that a decisive breakout above 26,500 would signal a shift to a stronger medium-term uptrend. “If we manage to break and sustain above this level, the index can head meaningfully higher. Even if there is some interim pullback, the broader structure suggests that 26,500 will eventually be crossed,” he noted.
For now, the bias remains positive, with the market attempting to move higher from current levels as the new trading series begins.
PSU banks, metals and autos led 2025
Reflecting on sectoral performance in 2025, Srivastava said the year cannot be described as just a PSU bank story, even though they topped the charts. “PSU banks delivered nearly 31% returns, but metals were close behind at around 29%, while autos gained nearly 23%,” he said.
According to him, the common driver behind these outperformers was aggressive interest rate cuts by the RBI under the new governor, which benefited rate-sensitive sectors such as banking, metals and automobiles.
Rate-sensitive stocks outperform, PSU banks lead financials
Within financials, PSU banks and NBFCs clearly outperformed large private banks in 2025. “This trend of PSU banks and NBFCs doing better than largecap banks has been quite strong, and it is unlikely to reverse suddenly,” Srivastava said.
Broader participation needed for next rally
However, for the Nifty to decisively move beyond 26,500, Srivastava stressed the need for broader sector participation. “Autos, metals and PSU banks have done the heavy lifting. For the next leg of the rally, other sectors will need to join in—and I believe that will eventually happen,” he added.
With the Nifty holding above crucial support and leadership from rate-sensitive sectors intact, the technical setup suggests a cautiously optimistic outlook. A breakout above 26,500 could mark the beginning of a stronger phase for the broader market, provided sector rotation expands beyond the current leaders.