F&O Talk: Nifty’s break above 22,750 could open doors for 23,000; Sudeep Shah picks 5 stocks for next week

The Indian stock market swung sharply into the green on Friday, with easing oil prices, a rally in IT stocks and other factors triggering a strong rebound in the Sensex and Nifty and helping them snap an eight-week-long losing streak. The recovery came a day after a sharp selloff in the previous session.

Sensex jumped over 879 points to 72,472 while Nifty 50 gained 289 points to close above the 22,520 level. The sharp gains have added more than Rs 4 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to nearly Rs 465 lakh crore.


1.) Nifty finally broke the 8-week curse to rise this week. What are charts indicating?

The benchmark index Nifty has snapped its eight-week losing streak, its longest weekly losing streak since 2001, by ending the week with a modest gain of 0.44%. The index formed a Doji candlestick on the weekly chart, while the daily chart witnessed the formation of a Bullish Harami pattern. Notably, both formations have emerged near a crucial support confluence comprising the 200-week EMA and the lower trendline of the rising channel. With multiple reversal signals emerging near a critical support zone, the key question is whether the bears are finally losing their grip.

While these formations offer early signs of stabilisation, they need confirmation through follow-up bullish momentum over the next couple of trading sessions to establish the possibility of a sustained reversal. Despite the recent pullback, the index continues to trade below its key moving averages, while momentum indicators and oscillators largely reflect a sideways bias. That said, bullish crossovers on the daily RSI and Stochastic indicators suggest that the immediate downside may remain limited. The improving short-term momentum offers some relief, but the recovery still faces a crucial test before it can gain credibility.

The upcoming support and resistance levels will play a decisive role in determining the index’s next move. The 22,200–22,250 zone will serve as a crucial support area, and a decisive break below 22,200 could revive the prevailing downtrend and expose the index to further weakness. On the upside, the 22,750–22,800 zone remains a key resistance band that the index must overcome to strengthen the recovery.

A sustained move above the immediate resistance band of 22,750–22,800, particularly above 22,800, could pave the way for an extension towards 23,100, followed by 23,300 in the short term. Ultimately, the next few trading sessions will reveal whether Nifty is preparing for a meaningful rebound or merely pausing before its next decisive move.


2.) IT stocks outperformed on Friday. How is the IT index looking & how are charts looking after TCS earnings ?

The Nifty IT Index has been consolidating in the 27,613–28,777 range since late September. The index continues to trade below key moving averages on the weekly chart, keeping the broader trend weak. The RSI has recovered from oversold territory, but momentum remains subdued, with no clear signs of a strong trend reversal yet. On the Relative Rotation Graph (RRG), the IT Index is placed in the Improving quadrant, indicating early signs of improving momentum, although relative strength remains limited. The 27,600–27,550 zone is likely to act as immediate support, while the 20-week EMA zone of 29,500–29,550 is expected to act as a key resistance. A decisive and sustained breakout above this zone could trigger a meaningful pullback in the near term.

TCS witnessed a sharp pullback towards its 50-day EMA but faced profit booking around this level. Despite the recovery and early signs of improving momentum, the broader technical structure remains weak. On the weekly chart, the stock continues to trade below key moving averages. The 20-week EMA zone of Rs 2,255–2,260 is likely to act as immediate resistance. A decisive breakout above this zone would be necessary to strengthen the case for a meaningful pullback in the near term.


3.) Do you think Bank Nifty can outperform Nifty in coming sessions?

Last week, the Bank Nifty outperformed the frontline indices and ended with a gain of 1.45%. However, the index traded within a narrow range of 1,048 points, marking its lowest weekly trading range since the last week of August. On the weekly chart, it formed a small-bodied candle with shadows on both sides, reflecting a phase of consolidation and indecision.

The ratio chart of Bank Nifty relative to Nifty continues to form a sequence of higher tops and higher bottoms, indicating sustained relative strength and outperformance versus the broader market.

Despite the recent recovery, the index remains below its key moving averages, suggesting that the broader trend is yet to turn decisively positive. However, momentum indicators are showing signs of improvement. The daily RSI is hovering around 45 and remains in rising trajectory, while the daily MACD has given a bullish crossover, indicating limited downside risk in the near term.

Going forward, the 55,900-56,000 zone will act as a crucial hurdle for the index. A decisive move above 56,000 could extend the pullback rally towards 57,000, followed by 57,600 in the short term.

On the downside, the 54,400-54,300 zone is likely to provide important support. As long as the index holds above this region, the pullback bias may remain intact. A sustained breach below 54300 could revive selling pressure and weaken the short-term outlook.


4.) Name a few stocks that can be on traders' radar for the coming week?

Technically, Radico Khaitan, Karur Vysya Bank, ICICI General Insurance and Nykaa are looking good.


5.) Which sector is looking good on the charts?

Technically, Nifty CPSE, PSE, India Defence, Oil & Gas, Energy, Auto, Commodities, FMCG, Infra, Metal, Realty and Cement are likely to continue their underperformance. On the other hand, Nifty Private Bank is likely to outperform in the short term.



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