Daijiworld Media Network - Mumbai
Mumbai, May 18: The Indian equity markets took a breather this past week after a sharp rally, with the benchmark Nifty managing to close just above the key 25,000 mark. While the headline indices showed slight consolidation, analysts point to underlying bullish signals and strong momentum in broader markets.
The BSE Midcap index climbed 0.8%, and the Smallcap index rose 1%, reflecting robust investor interest in mid and small-cap segments. According to Kailash Rajwadkar of Choice Broking, this broader market outperformance highlights increasing market breadth—often a positive sign for future trends.
Technically, the Nifty has broken out of a Rounding Bottom pattern on the weekly chart, backed by healthy volumes. “This formation suggests short-term upside potential toward 28,000, with near-term resistance expected at the 26,000–27,000 range. On the downside, 24,300 and 24,000 offer strong support and could serve as key buy zones in case of any pullback,” Rajwadkar said in a client note.
Momentum indicators reinforce the bullish view. The Relative Strength Index (RSI) is at 61.9 and trending upward, and the Nifty is trading comfortably above its 20, 50, 100, and 200-day exponential moving averages—a strong sign of continued upward momentum. Rajwadkar recommends a "buy-on-dips" approach in this phase.
In the derivatives market, volatility subsided, with the India VIX falling sharply by 23.49% to 16.55. “This decline in volatility suggests a more stable environment for traders. Heavy call writing at 25,500 and 26,000 indicates overhead resistance, while strong put writing at 25,000 confirms this as a critical support level,” Rajwadkar added. A decisive move above 25,000 could potentially reignite fresh buying.
The Bank Nifty index remained resilient, hovering just below the 56,000 mark. The weekly setup shows a breakout from a prior consolidation phase, with prices holding above the breakout zone—a signal of further potential upside in the banking space.
Nandish Shah, Senior Derivatives and Technical Research Analyst at HDFC Securities, also highlighted macro tailwinds. “The Indian Rupee appreciated slightly by 5 paise to close at 85.50 against the dollar, aided by a weaker dollar index and softer crude oil prices,” he said.
Among sectors, Realty, Media, and FMCG stocks led the gains, while IT, Healthcare, and Metal sectors witnessed selling pressure.
Shah also noted that the Nifty’s next key resistance lies at 25,207, corresponding to the 76.4% Fibonacci retracement of a prior decline. On the flip side, 24,800 may act as immediate support in the near term.
Outlook: With momentum intact, a firm hold above 25,000 could set the stage for the next leg higher, though analysts recommend maintaining a disciplined, risk-managed approach amid global and macroeconomic uncertainties.