F&O Talk: Sudeep Shah Highlights Smallcap Index’s Advantage Over Nifty, Recommends 9 Stock Picks for Upcoming Week.
The Indian stock market displayed resilience on Friday, with the Sensex and Nifty indices gaining over 0.3% amid easing regional tensions and diminishing expectations for Federal Reserve rate hikes. The Sensex climbed approximately 262 points to close at 77,764, while the Nifty 50 advanced over 95 points, ending the session at 24,270. This collective movement resulted in an increase of Rs 44,155 crore in the total market capitalization of companies listed on the BSE, bringing it to a notable Rs 480 lakh crore. Market analysts note that the Nifty index has broken a 13-session consolidation phase, although subsequent profit booking curtailed further upside momentum. In this context, the market is witnessing a tug-of-war between bullish and bearish sentiments, as indicated by the indecisive candlestick formations over several consecutive weeks.
The broader market is presenting a contrasting scenario, particularly exemplified by the Nifty Smallcap 100, which has consistently outperformed the benchmark indices and is nearing its all-time high. This positive divergence is characterized by an 81-week high in the relative strength chart against Nifty, suggesting that the small-cap sector could sustain this bullish momentum in the upcoming trading sessions. In light of technical indicators, the Nifty is presently trading above its 20, 50, and 100-day EMAs, with the daily RSI surpassing the 60 threshold, signaling strengthening bullish momentum. Key resistance levels for the Nifty are expected to lie in the 24,400–24,450 range, while immediate support appears anchored around 24,150–24,100.
The market’s future trajectory could pivot on the Nifty’s break above the mentioned resistance levels. If the index can decisively break through 24,450, we might witness renewed bullish momentum toward targets of 24,700 and 24,900. Conversely, a downward breach below 24,100 could expose the market to steeper corrective pressures, testing further support areas. Furthermore, the activity in the futures and options market suggests a constructive outlook for Nifty as short covering has been observed despite recent shifts in open interest, indicating a potential buildup of long positions as sentiment evolves positively.
In sector-specific performance, the banking segment remains critical albeit indecisive, with the Bank Nifty demonstrating subdued momentum yet still trading comfortably above major moving averages. Traders should monitor the 58,600–58,700 resistance zone closely; a breakout here could catalyze substantial upward momentum. On the other hand, the Nifty IT index retains a cautious outlook, hindered by weak momentum and relative underperformance. As the market continues to evolve amidst these intricate dynamics, select stocks expected to perform well include Aurobindo Pharma, Lodha, and Titan, offering potential avenues for investors seeking to capitalize on shifting market conditions.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)