Market volatility sentiment-driven, no structural breakdown yet: Vinay Rajani

The ongoing volatility in Indian equities is largely sentiment-driven rather than expiry-led or structurally weak, with the benchmark index locked in a tight consolidation range for over a month, according to Vinay Rajani, AVP and Senior Technical & Derivative Analyst at HDFC Securities.

Speaking to ET Now, Rajani said the market has remained range-bound for the past five consecutive weeks, reflecting indecision rather than a trend reversal.

Nifty stuck in a narrow consolidation

Rajani highlighted that the benchmark index has been oscillating in a 500-point band, with resistance near 26,200 and support around 25,700.


“The market is not finding any momentum or clear direction. This consolidation phase has continued despite multiple attempts to break out,” he said.

He added that the 50-day exponential moving average (EMA) near 25,834 has emerged as a crucial support level. “In December, we have already seen two sharp reversals from this zone, and the index is once again approaching it,” he noted.

Market breadth a near-term concern

While the broader sentiment remains subdued, Rajani cautioned that the advance-decline ratio is not supportive, indicating weak market breadth.

“That is a concern, but consolidation phases often see poor breadth. A reversal can still happen anytime,” he said, adding that selective stocks continue to show strength despite the lack of index momentum.

Key levels to watch

Rajani said traders should closely track the 25,700 level on a closing basis.

“As long as 25,700 holds, the possibility of an upside reversal remains intact. A decisive move above 26,150 would be an early signal of renewed bullishness,” he said.

He advised traders to maintain long positions with strict stop losses near the lower end of the range.

Stock picks: Selective opportunities emerging

Despite the choppy market, Rajani sees pockets of safety in select stocks showing fresh technical strength.

Jindal Stainless:

The stock has shown a fresh breakout with rising volumes and resilience during market declines. Rajani recommends buying near ₹815, with a stop loss at ₹790 and a short-term target of ₹850.

UPL:

UPL is trading near its all-time high and continues to outperform the broader chemical space. Rajani suggests buying around ₹778–779, keeping a stop loss at ₹764, and targeting ₹850 on the upside.

Outlook

Rajani summed up the current market phase as one of patience and discipline. “Momentum is missing, but consolidation itself is not bearish. Traders should stay selective, respect key levels, and focus on stocks showing relative strength rather than chasing the index,” he said.