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The Indian stock market is currently navigating a complex landscape characterized by geopolitical tensions and technical resistance levels. The Nifty index, a key benchmark for Indian equities, is facing a crucial test near the 25,200 level. Following a recent rally, analysts are closely watching whether the index can sustain a move above this threshold, which could potentially pave the way for a further ascent towards 25,700–25,900. However, the presence of geopolitical uncertainties injects a degree of volatility into the market, warranting a cautious approach from investors. On the downside, the 24,500 level remains a crucial support zone. Amidst this broader market dynamic, stock-specific action in sectors such as banking, midcaps, and select individual names like Mahindra & Mahindra (M&M), Bharat Electronics Limited (BEL), and Computer Age Management Services (CAMS) are presenting trading opportunities. These stocks exhibit relative strength and are showing signs of potential upside, making them attractive targets for traders seeking to capitalize on specific market movements.
According to a Vice President at Motilal Oswal Financial Services, geopolitical tensions have contributed to a consolidation phase in Indian markets over the past month. However, this consolidation appears to be a time-wise corrective phase within a broader uptrend, with the Nifty index maintaining its position above the critical support zone of 24,500–24,450. The immediate hurdle for the index lies within the 25,200–25,250 range. A successful breakout above this range could potentially propel the index towards 25,500–25,700. Conversely, on the downside, 24,800 serves as the immediate support level, followed by positional support at 24,450. The analyst advises traders to focus on stocks that have demonstrated relative strength over the past month. Mahindra & Mahindra (M&M) is highlighted as a stock that has given a breakout signal, indicating a bullish trend. Furthermore, exchange-related stocks such as MCX, and defence-related names like BEL, BEML, and BDL are expected to extend their uptrend in the short term, presenting potential investment opportunities.
An EVP at YES Securities notes that despite elevated global uncertainty, inter-market signals suggest relative strength for Indian equities. The recent 300-point rally in the Nifty index is seen as a positive shift, as the market had been struggling to establish a trending move. Importantly, the index managed to sustain its gains without experiencing a significant cooling-off period. The firm's customized Top 10 Nifty index has gained momentum after weeks of consolidation, indicating strength in large-cap stocks. Their breadth indicator has also shown a bullish crossover, with approximately 58% of index constituents displaying a bullish bias. An ABC breakout, coupled with a double-top buy signal on the Point & Figure chart, and improving breadth, suggests a potential move towards the 25,700 zone. Improved breadth, renewed traction in banks and financials, and support in the Midcap 100 index around its 10-column average all point to further upside potential. The analyst suggests sectors such as Capital Markets and Defence are bouncing from support. Stocks like BEL, CAMS, and CDSL are exhibiting multiple bullish patterns and could potentially rally 10–14% in the coming weeks. Furthermore, the ratio of IT to Nifty has followed through on a bullish turtle breakout, suggesting a potential comeback for select IT stocks.
The Head of Technical Research at Monarch Networth Capital observes that the Nifty has been consolidating within the 24,500–25,200 range for the past six weeks, lacking a clear directional trend. Despite absorbing geopolitical shocks, including the India-Pakistan conflict, the market has managed to hold key support levels. Friday’s trading session concluded with a strong bullish candlestick formation, indicating that a breakout above 25,200 could trigger short-covering and open upside targets of 25,600–25,900. The banking index, which has been consolidating near its all-time high, is expected to move in line with the benchmark, with upside targets of 57,200–58,000. The midcap index has formed a strong reversal at its breakout level. Traders can consider buying for upside targets of 13,400–13,600. The IT index has been gradually inching up, offering a favorable risk-reward setup. Investors may accumulate HCL Tech, Kaynes, and R Systems at current levels. PSU bank stocks, including SBI and Bank of Baroda, have experienced profit booking following the RBI rate cut and are now near support levels, presenting potential buying opportunities. However, defence stocks, having rallied sharply in recent months, now present an unfavorable risk-reward and are best avoided. Among mid- and small-caps, CGCL, Praj Industries, GPIL, and Bharat Rasayan are considered good accumulation bets at current levels.
Source: Nifty faces key resistance at 25,200 amid geopolitical tensions