Despite a supportive backdrop from the Fed with a 0.25% rate cut, and a break in the breadth deterioration, the index faced resistance near recent highs. India VIX fell -2.01% to 10.11, indicating continued complacency and lower hedging demand. Nifty ended the week with a mild loss of 139.50 points or -0.53%.
ETMarkets.comThe broader Nifty framework remains bullish, even as the index is navigating through key inflection zones. It continues to hover above the descending trendline, facing resistance near 26,150–26,200. The ongoing price action shows reluctance to decisively clear this resistance.
The absence of a clear catalyst, such as the unresolved US-India trade deal, adds to the inertia. That said, the Fed’s dovish stance could provide medium-term tailwinds, but for now, the index appears to be in a technical break within an established uptrend. A decisive move above 26,200 would be needed to confirm a fresh breakout and extend the trend.
Given the current setup, next week could be a cautious start. Initial resistance is at 26,200 and 26,300, followed by a strong resistance near 26,550, the upper Bollinger Band. On the downside, immediate support is at 25,750, followed by the 25,600 zone.
Weekly RSI is at 61.34; It remains in the bullish zone and shows no divergence against the price, indicating a neutral momentum bias. MACD is above its signal line and continues to maintain a positive crossover. A recent candle is a small-bodied bearish candle with a moderately long lower shadow near resistance, indicating uncertainty or short-term exhaustion.
From a pattern perspective, the Nifty remains above the symmetrical triangle it has broken out of. The index is showing some strength when it consolidates above its breakout point and below its high point. While such strength near resistance and such losses of consolidation traditionally have bearish implications, the upper bound is often tested, which also reflects strength. The index is trading well above all key moving averages (20, 50, 100, 200-week), indicating that the larger trend remains intact and up, but a clean breakout above the wedge is still awaited.
In light of the technical and macro setup, traders should be moderately cautious. Until a breakout above 26,200–26,300 is confirmed, it is advisable to protect profits at higher levels and avoid aggressive long exposure. A stock-specific approach emphasizing relative strength and risk management is preferred. The approach for the coming week should be defensive, selective and responsive to any breakout confirmation.
In our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), which represents more than 95% of the free-float market cap of all listed stocks.
ETMarkets.comETMarkets.comThe relative rotation graphs (RRG) show that the Nifty Financial Services and Midcap 100 indices have rotated within the leading quartile. Nifty Bank, Infrastructure and PSU Bank indices are also within the leading quartile. These groups tend to outperform relatively broader markets.
Nifty metal and auto index are inside the weak quartile. While the stock-specific performance of these sectors cannot be denied, their relative performance may be somewhat subdued.
Nifty PSE, commodities and energy indices are back inside the lagging quadrant. Along with them, media, consumption and FMCG are also placed within this quadrant. They are expected to relatively underperform the broader markets.
Realty, IT and services sector indices are in the improving quadrant.
Important Note: The RRGTM chart shows the relative strength and momentum of a group of stocks. In the above charts, they show relative performance against the NIFTY500 index (broader markets) and should not be used directly as buy or sell signals.
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