Renewed optimism over the revival of India–US trade talks, along with the US Federal Reserve’s first rate cut of 2025, lifted market sentiment. The positive spillover from recently announced GST reforms continued to aid consumption-driven sectors, while Crisil’s forecast of softer inflation at 3.2% for FY26 fueled expectations of further RBI policy easing later this year. However, mixed FII flows kept overall gains in check.
With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ET Markets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:
This week witnessed a nice momentum in the markets. Does it seem like it will continue?
As we step into the vibrant season of Navratri starting Monday, it feels like the market has already begun its celebrations a week in advance. Much like the rhythmic beats of garba and dandiya that grow stronger with each passing day, the benchmark index Nifty has danced its way to a Symmetrical Triangle breakout, which was followed by a sharp upside rally. By the end of the week, Nifty closed above the 25,300 mark with gains of nearly 1%, marking the third consecutive week of positivity.
Just as Navratri signifies the power of devotion and strength, this rally too was in line with our expectations, as we had highlighted earlier that Nifty appeared well-positioned for a breakout. From the recent low of 24,404, the index has surged more than 1,000 points in just 15 trading sessions. What makes this move even more festive is the broader participation, with both the Nifty Midcap and Nifty Smallcap 100 ending in the green for 11 consecutive sessions. Now, just as devotees eagerly look forward to the nine days of divine celebrations, the market too leaves us with the exciting question — what’s next in this grand festive rally?
We believe the index may pause briefly in the coming sessions, much like the moment of rest between energetic dance beats, before resuming its northward journey. Technically, the setup across moving averages continues to showcase strong bullish momentum, while momentum-based indicators also echo a similar positive rhythm.Talking about crucial levels, the zone of 25,200–25,150 is expected to act as immediate support, being the confluence of the 8-day EMA and the 23.6% Fibonacci retracement level of the recent rally (24,404–25,448). On the upside, any sustainable move above the 25,450–25,500 zone could set the stage for the next leg of the rally, potentially extending towards 25,750 and even 26,000 — a true festive feast for the bulls.
Nifty staged a nice performance too. What were the factors behind this, in your opinion?
Nifty’s strong performance can be attributed to a mix of supportive domestic and global triggers. On the global front, the Fed’s rate cut came in on expected lines, keeping liquidity conditions favourable for emerging markets. This supported risk appetite across equities. Domestically, India’s macro backdrop remains resilient—CPI inflation has moderated in recent months, and GDP growth continues to surprise on the upside, underpinning confidence in the economy. Sectorally, PSU Banks and auto names led gains, supported by healthy credit growth trends and robust festive demand expectations. Additionally, FIIs have been gradually covering their short positions in Index futures on the back of renewed optimism around the India-US tariff talks. On the technical front, Nifty witnessed a symmetrical triangle breakout recently, which triggered short covering and fresh long additions in derivatives. Overall, the combination of strong macros, supportive flows, and favourable global cues helped Nifty stage an impressive move higher.
What key levels should we watch out for in the upcoming week?
Talking about crucial levels, the zone of 25,200–25,150 is expected to act as immediate support, being the confluence of the 8-day EMA and the 23.6% Fibonacci retracement level of the recent rally (24,404–25,448). On the upside, any sustainable move above the 25,450–25,500 zone could set the stage for the next leg of the rally, potentially extending towards 25750 and even 26,000 — a true festive feast for the bulls.
A surprise came in from Bank Nifty, too. The index performed very well this week, closing the third week in green. Can we expect an all-time high in this index sooner than Nifty?
The banking benchmark index Bank Nifty also ended the week on a positive note, marking its third consecutive weekly gain. From the recent low of 53,578, the index has staged a sharp recovery of over 2,200 points in just 11 trading sessions, reflecting a strong comeback in banking stocks.
This rally has pushed the index above its short- and medium-term moving averages, indicating a shift in momentum. Notably, the 20-day and 50-day EMAs have started to slope upwards, which is a bullish technical signal and suggests improving short-term trend strength.
Looking ahead, based on the current chart structure, the index is likely to enter a brief consolidation phase over the next few trading sessions. This pause could help the index stabilize and build a stronger base before attempting another upward move.
On the technical front, the 20-day EMA zone between the 55,000-54,900 levels is expected to act as a key support area. Holding above this zone will be crucial for maintaining the bullish bias. On the upside, the 55,900–56,000 zone will serve as an important resistance, as it coincides with the 61.8% Fibonacci retracement level of the prior decline from 57,628 to 53,561. A sustained breakout above 56,000 could trigger a fresh rally, with potential upside targets around 56,800, followed by 57,500 in the short term.
What is the current inference on the FII-DII situation right now?
The long-short ratio has gradually improved from 7.43% on 5th September to 13.96% on 18th September, indicating a gradual reduction of short exposure by FIIs, suggesting cautious optimism. However, the strengthening US Dollar against the Indian Rupee is keeping FIIs cautious and relatively on the sidelines for now. Since the start of the current financial year, the dollar has strengthened nearly 3% against the rupee.
Looking at FIIs and DIIs’ cash market activity since the start of September, FIIs have largely been net sellers or inactive, reflecting their caution amid currency volatility and global uncertainty. On the other hand, DIIs have been steady buyers, supporting market stability amid FII outflows. This divergence suggests domestic investors are cushioning the market impact while FIIs await clearer triggers or improved currency conditions before resuming larger investments. Overall, this environment calls for watching currency trends and global cues closely for FII return signals.
Fed’s rate cute of 25 bps also came on expeccted lines. This largely seemed to be priced in. What’s the next factor likely to affect our markets?
With the Fed’s 25 bps rate cut on expected lines, markets are now eyeing the next set of catalysts. Domestically, the focus will be on the Bihar state elections, likely to be in the month of November, as political stability and policy continuity remain key drivers of investor sentiment. Any surprises there can dampen the sentiment in the market in the short term. In the near term, the F&O expiry rollover, which begins early this month on Tuesday instead of Friday, could add to volatility as traders adjust their positions. Macro data will also be crucial—CPI inflation trends, RBI’s policy stance, and corporate earnings momentum, with Q2 results starting October, will guide direction. Globally, US economic data releases and the impact of ongoing trade tensions or tariff actions will shape foreign flows. Crude oil prices and China’s growth outlook remain additional swing factors. Overall, with global liquidity supportive but local event risks rising, Indian markets could witness heightened volatility before resuming their broader trend.
Let’s talk about the Adani Group stocks after SEBI’s clean chit in the Hindenburg case? How do the stocks look now?9. Now that we are over the major events that would’ve affected our markets, which are the sectors to focus?
The sentiment around Adani Group stocks turned sharply positive on September 19 after SEBI cleared the conglomerate and its founder of any wrongdoing in the Hindenburg-linked stock manipulation probe. This regulatory relief triggered a broad-based rally across Adani counters, reflecting renewed investor confidence.
On the technical front, Adani Enterprises surged over 5%, breaking above the upper Bollinger Band and testing the Rs 2,500 zone with strong volumes, suggesting a fresh bullish breakout, post 5 days of narrow consolidation. Adani Total Gas spiked more than 7%, decisively breaking above short-term moving averages, though a long upper shadow hints at profit booking at higher levels. Adani Green Energy gained over 5%, extending its pullback after reclaiming the Rs 1,000 mark, indicating strong momentum. However, the formation of a doji candle reflected indecision on an intraday basis amongst market participants. Adani Power also edged higher, with strong volumes sustaining above its short-term EMAs, decisively closing above the upper Bollinger band as well.
Having said that, the overall chart structure is positive with the indicators supporting the bullish tone. RSI across counters has moved past 60, reflecting strengthening momentum, while ADX readings indicate trend acceleration. The overall outlook for Adani stocks remains bullish, with potential for further upside, though intermittent profit booking may occur after steep rallies.
Which stocks can the investors keep on their radar now?
From a technical perspective, several stocks are showing strong bullish setups and are likely to continue their upward momentum in the near term. Notable names include Bank of Baroda, Union Bank, Canara Bank, Punjab National Bank (PNB), Bank of India, MCX, HUDCO, Lemon Tree Hotels, Bharti Airtel, Godrej Properties, Sammaan Capital, BHEL, and Anant Raj. These stocks have either broken out of key resistance levels, are trading above their moving averages, or are supported by strong volume and momentum indicators—making them attractive candidates for short-term tracking.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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