F&O Talk: Nifty’s bullish structure intact after best week in 5 years; Sudeep Shah on HDFC Bank strategy, picks 5 stocks this festive season

The Indian stock market ended the week with a bang, with Sensex and Nifty rallying more than 2% each on Friday even as global markets crashed as the AI frenzy fizzled out following US President Donald Trump’s defeat in the midterm elections. Benchmark Nifty rose 8% to record best week in 5 years.

Sensex jumped 1,718 points to close above 81,028 while Nifty gained around 494 points to close at 25,030 on Friday. The rally in benchmark indices came even as broader markets slipped into the red.

Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty, HDFC Bank, and AI-linked stocks.

1.) Nifty surged 8% this week to log best weekly gain in 5 years. What are charts indicating right now?

Nifty has staged a powerful comeback, rising nearly 13% over the past 20 trading sessions. More importantly, the recovery has now translated into a significant improvement in the index's technical structure.

The benchmark index has given a breakout above a downward-sloping trendline connecting the highs of 26,341 (February 3) and 24,774 (August 3), and has closed above the breakout zone, signalling a potential shift in the prevailing trend.

The price action is further supported by a strong improvement across momentum indicators. Nifty is now trading comfortably above its key short- and long-term moving averages, with these averages beginning to turn upwards, reflecting a broad improvement in the underlying trend.

The directional movement indicators are also painting an encouraging picture. The DI lines have witnessed a bullish crossover and are widening, with DI+ placed significantly above DI− in the ADX indicator. This reflects increasing directional strength in favour of the bulls and indicates that buyers currently have a firm grip over the market.

The daily RSI has reclaimed the 70 mark for the first time since October 2025 and continues to trend higher, highlighting the strength of the ongoing bullish momentum.

Another interesting development is that Nifty has closed above the upper Bollinger Band for five consecutive sessions. Such sustained price action outside the upper band is often witnessed during the initial stages of a strong trending move, when buying momentum remains exceptionally strong.

Adding to the positive setup, the MACD line has crossed above the zero line, accompanied by rising green histogram bars, further reinforcing the bullish bias.

From a technical perspective, the erstwhile resistance zone of 24800-24750 is likely to act as an important support area, in line with the principle of polarity. As long as Nifty sustains above the 24750 mark, the short-term bullish outlook remains intact, keeping the door open for another upward move after consolidation. The real test for the bulls now is not just to keep the festive spark alive, but to ensure that the recent gains continue to shine in the sessions ahead.

2.) HDFC Bank also has been on a stellar run this week. Can this extend?

HDFC Bank has given a double-bottom neckline breakout on the daily chart and moved higher, signalling a significant improvement in its price structure. The breakout was further supported by a downward-sloping trendline breakout, which followed the formation of a bullish RSI divergence, adding strength to the ongoing recovery.

The RSI has also broken above its downward-sloping trendline, indicating a meaningful improvement in bullish momentum. Additionally, the stock has closed above the upper Bollinger Band, a phenomenon often witnessed during the initial stages of a strong trending move.

Furthermore, the MACD line has moved above the zero line, accompanied by rising green histogram bars, further reinforcing the bullish bias. The combination of multiple bullish chart patterns and improving momentum indicators suggests that the stock is well-positioned to extend its ongoing upmove in the near term.

3.) Mid and smallcaps have taken a back seat as compared to largecaps. Do you expect consolidation to continue?

The Midcap Index has staged an impressive rebound of nearly 10% from its recent low of 55,101 recorded on October 26. During this recovery, the index gave a breakout above a downward-sloping trendline and reclaimed its 100-day EMA, reflecting a significant improvement in its underlying price structure.

The recent recovery in the Midcap Index also coincided with the upward sloping trendline support, drawn connecting the low of 46,967 made on 7th April 2025 & 52,033 made on 30th March, 2026

The RSI had given a falling-wedge-like breakout in early November and subsequently moved higher, indicating a meaningful improvement in bullish momentum. The rising MACD histogram bars further reinforce the positive underlying momentum.

Seasonality also provides an encouraging backdrop. November has historically been a favourable month for the Midcap Index, which has ended the month in positive territory in 15 out of the past 20 years, with an average monthly gain of 2.02%.

On the upside, the 61,100–61,200 zone is likely to act as immediate resistance. Any decisive and sustained breakout above 61,200 could extend the ongoing recovery towards 61,700, followed by 62,300 in the short term. On the downside, the zone of 60,100–60,000 zone is likely to act as immediate support.

The Smallcap Index has witnessed a sharp rebound from its previous swing-low zone of 17,400–17,200, recorded on October 26, delivering a pullback of nearly 8.75%.

Interestingly, this is the same support region from which the index had staged a significant recovery on May 18, 2026. On that occasion, the index rallied 15.82%, eventually scaling an all-time high of 20,188 on September 4, 2026.

However, the ongoing recovery has encountered resistance after the index moved above the 61.8% Fibonacci retracement level of its preceding decline from 20,188 to 17,433 but failed to sustain at higher levels. This resulted in a lower close on November 6, suggesting that selling pressure is emerging near an important technical hurdle.

Another interesting development is visible in the Midcap/Smallcap ratio chart. The ratio line has moved above its previous swing high, indicating that the Midcap Index could outperform the Smallcap Index in the near term.

This relative-strength development suggests that while the broader market recovery remains intact, the participation could become more selective, with midcaps potentially taking the lead over smallcaps.

On the upside, the 19,400–19,500 zone is likely to act as immediate resistance. Any decisive and sustained breakout above 19,500 could extend the ongoing recovery towards 20,00, followed by 20,500 in the short term. On the downside, the zone of 18,400–18,300 zone is likely to act as immediate support.

4.) What is your strategy for AI-linked stocks such as HFCL, Sterlite, CG Power after Friday bloodbath?

Global AI-linked stocks have witnessed significant selling pressure amid concerns over a potential slowdown in data centre investments. The changing political narrative in the US, with elected Democratic leaders expected to oppose large-scale data centre expansion and massive AI infrastructure spending, has further weighed on sentiment.

Interestingly, this could create an opportunity for traditional IT services companies, as the market increasingly positions them as beneficiaries of an emerging anti-AI trade. Consequently, Nifty IT could see relatively better traction in the near term.

Against this backdrop, we would remain cautious on AI-linked stocks such as HFCL, Sterlite Technologies and CG Power. Rather than attempting to catch the falling knife, it would be prudent to avoid fresh exposure to these counters until global sentiment stabilises and clearer signs of a reversal emerge.

5.) Name 5 stocks that look good on the charts to buy on Monday

Technically, IT, Pharma, Healthcare, Tourism, Infrastructure, Capital Market, Auto, Financial Services, Private banks, Realty, PSU Banks, IT, Manufacturing & Metals sectors show improving price action structure and strong relative strength.