Nifty, India’s benchmark equity index, ended its three-session losing streak to close positive on Tuesday, with strong gains in the information technology (IT) and pharmaceutical (pharma) sectors driving the rally. The trade was marked by a narrow range of 25,500–25,650 as the index faced resistance near the 50-day exponential moving average (EMA).
According to Rupak De, Senior Technical Analyst at LKP Securities, the index failed to sustain above the 21 EMA on a closing basis, which is a signal that weakness may persist over the next 1-2 sessions. However, De noted that the index has taken support along the upper band of the falling channel on the daily timeframe, suggesting that the broader structure remains intact.
“The broader perspective suggests that the index has taken support along the upper band of the falling channel,” De said. “However, a decisive move above 25,600 will be crucial to confirm the resumption of a directional upward move. Until then, the index is likely to continue its sideways consolidation phase.”
De’s comments come as the Nifty50 index has been trading in a narrow range for several sessions, with the upper band of the falling channel at 25,600 being a key level of interest. The index has been influenced by the performance of the IT and pharma sectors, which have seen significant gains in recent days.
The IT sector has benefited from improved earnings growth and robust demand for technology services, while the pharma sector has rallied on the back of strong sales of vaccines and other medicines. These sectors are expected to continue driving the market’s momentum in the coming sessions.
However, De cautioned that the index’s sideways consolidation phase could persist until a decisive move above 25,600 is made. “A failure to sustain above this level will be a signal that weakness may persist over the next 1-2 sessions,” he warned.
In conclusion, while Nifty ended its losing streak on Tuesday, it remains unclear whether the index can sustain a directional upward move. Investors are advised to remain cautious and monitor the market’s progress closely.
Key takeaways:
- The Nifty50 index has ended its three-session losing streak with a close above 25,500.
- The IT and pharma sectors have driven the gains in the index.
- A decisive move above 25,600 will be crucial to confirm a resumption of a directional upward move.
Recommendations for Tuesday:
- Nykaa: Buy with a target of Rs. 800 and stop loss at Rs. 750.
- BHEL: Buy with a target of Rs. 400 and stop loss at Rs. 350.
- Exide Industries: Buy with a target of Rs. 250 and stop loss at Rs. 200.
- Vedanta: Buy with a target of Rs. 300 and stop loss at Rs. 220.
- Indian Bank: Buy with a target of Rs. 150 and stop loss at Rs. 120.
