Nifty’s 22,200 defence may open the door to 23,600, says Geojit’s Anand James
Nifty’s sharp rebound after defending the 22,200–22,000 support zone could extend towards 23,600, according to Anand James, Chief Market Strategist at Geojit Investments. However, the index must first post a sustained close above 22,800 to confirm...
Nifty’s sharp rebound after defending the 22,200–22,000 support zone could extend towards 23,600, according to Anand James, Chief Market Strategist at Geojit Investments. However, the index must first post a sustained close above 22,800 to confirm that Friday’s recovery marks more than a relief rally, he said. James also sees early signs of leadership emerging in IT stocks, while Bank Nifty could help stabilise the broader market.
Edited excerpts from a chat:
Nifty defended the 22,200–22,000 zone and bounced sharply on Friday. Was this a technically meaningful reversal, or merely a relief rally after an oversold decline? What levels must the index reclaim before you would call this a trend reversal?
Yes, technically meaningful as key supports have been defended, underscoring traders’ willingness to go risk on. The inside bar formed thereof on Friday, appears to be a further signal towards this end, encouraging us to look at the prospects of 23400-600 as the likely objective. That said, given the bearish undercurrents, we would be keen to see a close above 22800 first.
What is the significance of Thursday’s 52-week low near 22,180, followed by Friday’s strong recovery? Does this create a potential selling climax or merely a temporary pause in the downtrend? The 22180 which runs close to the horizontal support that has drawn through significant lows since 2024 is also signified by the 23% fibo from the covid lows. That said, we did not see signs that are similar to selling exhaustion, but the support is significant enough to allow the bulls to regroup and attempt a push higher.
IT stocks led Friday’s rebound after TCS results, while the broader market remains fragile. Does the relative strength in IT indicate sector rotation, short covering or genuine leadership emerging? The strength in IT appears to be driven by a combination of short covering and the early stages of leadership emergence, rather than a one-day reaction to TCS results alone.
From a technical standpoint, the Nifty IT Index has started showing signs of a trend reversal. The index has moved back above its 20-DMA, while the MACD has delivered a bullish crossover and the RSI has recovered towards the neutral 50 zone, indicating improving momentum. More importantly, the weekly chart has formed multiple Pin Bar Doji candles near support, suggesting repeated rejection of lower levels and the emergence of buying interest.
Derivative data also supports a constructive view. Around 60-70% of IT stock futures witnessed short covering both on Friday and on a week-on-week basis, indicating that traders are unwinding bearish positions. In addition, nearly 80% of OTM put strikes have seen short build-up, reflecting expectations that the recent rebound could extend further.
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The participation of heavyweights such as TCS, Infosys, Wipro and HCLTech, all of which are displaying early reversal signals, lends credibility to the move. While part of the rally can be attributed to short covering, the improving technical setup suggests the sector may be transitioning into a phase of relative leadership. A sustained move towards the 29,190 (100-DMA) zone would further strengthen that view.
Bank Nifty recovered to around 55,257 on Friday. Is banking showing enough relative strength to stabilise the broader market, or does it still remain vulnerable to another leg of selling? Bank Nifty's rebound to the 55,250-55,300 zone suggests that banking sector is beginning to show relative strength and could play a stabilizing role for the broader market. The index has formed an inside-bar weekly reversal candle and managed to close above its 100-week moving average, indicating that buyers are attempting to regain control after recent weakness.
Momentum indicators are also improving, with the MACD witnessing a bullish signal crossover and the RSI recovering from oversold territory to around 45. The index continues to trade within a downward-sloping widening wedge pattern and is now approaching the key 55,700 hurdle. A sustained close above this level could trigger a move towards 56,500, which coincides with the 100-DMA.
Derivative data supports the recovery narrative, with around 50% of banking stock futures witnessing short covering and nearly 85% of OTM put strikes seeing short additions, reflecting expectations of further upside. Strength in HDFC Bank and SBI could provide the leadership needed
Physicswallah shares rallied about 20% last week. Do you see the uptrend bounce to continue in the week ahead? Despite rising over 22% since the start of this month, oscillators are yet to show signs of exhaustion, retaining reasonable room for upsides. Further, last three days’ closes have been near the upper bollinger band pointing to efforts to push beyond recent the trading range and the projections thereof. Towards this end, we are encouraged to set an upside target of 154, with downside marker placed at Friday’s reaction low of 135.
Give us your top ideas of the week.
JSLL (LTP: 385) View: Buy Target: 410 SL: 369
JSLL is showing early signs of a reversal after witnessing six consecutive sessions of decline. The formation of a Hammer candle near the recent lows suggests demand is emerging at lower levels. Supporting this view, the RSI has slipped to around 21, placing the stock in deeply oversold territory and improving the odds of a technical rebound.
Momentum indicators are also hinting at stabilization, with the MACD histogram flattening out after a sharp decline, indicating that bearish momentum is beginning to fade. The stock is currently attempting to build a base near a key support zone following the recent correction.
With downside pressure showing signs of easing and oversold conditions in place, the risk-reward appears favorable for a short-term recovery. As long as 369 is held, traders may look for a rebound towards 410 over the next few weeks.
Aditya Birla Capital is showing signs of a short-term reversal after witnessing a healthy correction from its recent highs. The stock formed a strong reversal candle in the latest session, indicating renewed buying interest near the support zone. Momentum indicators are also turning favorable, with the MACD histogram printing exhaustion candles, suggesting that bearish momentum is fading.
Further supporting the positive outlook, the RSI has moved above its moving average, reflecting improving momentum and the recent price action indicates that the stock is attempting to stabilize after the pullback, improving the risk-reward profile for a positional trade.
With downside pressure easing and momentum indicators showing early signs of recovery, the setup appears constructive for a rebound towards 405 in the next few weeks as long as it stays above 373.
(Disclaimer: This article has been written by Nikhil Agarwal, who is not a SEBI-registered Research Analyst or an Investment Adviser. Nikhil Agarwal and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers
