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Last week the Indian stock market saw strong gains, with Nifty 50 and Sensex rising over 4%. The uptrend was driven by a ceasefire between India and Pakistan, and optimism over a potential zero-tariff trade deal with the US, which boosted investor confidence. Additional support came from falling crude oil and gold prices, strong FII inflows, and a weaker US dollar. Despite minor profit-booking on Friday, both indices closed the week with solid, broad-based gains.

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Nifty 50 took a breather on Friday, largely trading sideways and forming a narrow-range bearish candle on the daily chart. Despite this, the overall bullish momentum remains intact. Major sectoral indices such as energy, FMCG, auto and realty, along with broader market indices such as Nifty Next 50, midcap and smallcap ended the session on a strong positive note.

However, sectors such as IT, pharma and metal saw profit-booking and underperformed, reflecting a sectoral rotation in market participation.

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From a technical perspective, Nifty50 is trading well above all its key moving averages on both the daily and weekly charts, indicating a firmly established uptrend. Bullish momentum remains strong across these time frames. 

The relative strength index (RSI) has turned upward and is currently hovering around 59, reinforcing the prevailing positive bias. The moving average convergence divergence (MACD) remains in positive territory and continues to display a bullish crossover, confirming the strength and sustainability of the ongoing upward momentum.

According to O'Neil’s methodology of market direction, Nifty 50 transitioned from a "rally attempt" to a “confirmed uptrend". 

Going forward, the index is expected to trade on a positive trajectory in the coming days. Immediate resistance is anticipated around 25,200-25,300. A sustained move above this range could potentially propel the index toward 25,700-25,800. On the downside, immediate support is placed around 24,800-24,700, which is likely to act as a cushion in the event of a pullback.

Nifty Bank remained on a bullish trajectory throughout the week, posting a weekly gain of over 3.20% and forming a bullish candlestick pattern on the weekly chart. However, the index took a breather on Friday, forming a narrow-range bearish candle on the daily chart, indicating consolidation after a strong rally. Nifty Bank opened at 55,276 on Friday, traded within 55,418-55,170, and settled at 55,355. 

Nifty Bank continues to trade above all its key moving averages on the daily and weekly charts. It is currently just 1% below its all-time high, underscoring a sustained bullish trend. On the daily chart, the RSI has flattened but remains in bullish territory, hovering around 61. Meanwhile, the MACD has shown a negative crossover, yet stays above zero, reflecting mixed short-term momentum within an otherwise positive broader trend.

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According to O'Neil’s methodology of market direction, Nifty Bank transitioned from an "uptrend under pressure" to a “confirmed uptrend".

Immediate resistance is seen near 56,000. A decisive breakout above this could initiate the next leg of the rally, potentially propelling the index toward 57,500-58,000 in the coming weeks. On the downside, immediate support is placed near the 21-day EMA, around 54,300, which is expected to act as a cushion in the event of a short-term pullback.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.

Trade name: William O’Neil India Pvt. Ltd.

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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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