Chartist Talk: Reclaiming 24,500-24,600 may not be easy for Nifty 50; Sudeep Shah recommends two stocks for next week

Reclaiming the 24,500–24,600 zone may not be easy in the immediate term, as the Nifty continues to lack strong directional momentum, said Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities in an interview to Moneycontrol.

According to him, the broader short-term trend remains positive as the index is trading above its 20-day and 50-day EMAs but momentum indicators are not yet supportive of a strong breakout.

Sudeep recommended accumulating Samvardhana Motherson International and CreditAccess Grameen for the next week. "Motherson has turned technically strong after breaking out of a symmetrical triangle pattern on the daily chart, while CreditAccess continues to exhibit strong bullish undertones after witnessing a healthy pullback from its 20-day EMA," he said.

Will the Nifty 50 find it difficult to reclaim the 24,500–24,600 zone, which many experts consider crucial for a move towards a record high?

Reclaiming the 24,500–24,600 zone may not be easy in the immediate term, as the Nifty continues to lack strong directional momentum. In the truncated trading week, the index remained highly volatile, tested both ends of its consolidation range, and formed a second consecutive High Wave candle, reflecting indecision among market participants.

From a technical standpoint, the broader short-term trend remains positive as the index is trading above its 20-day and 50-day EMAs. However, momentum indicators are not yet supportive of a strong breakout. The daily RSI is moving sideways, the MACD histogram indicates fading bullish momentum, and the ADX has declined to 15.27, highlighting the absence of a strong trending move.

In the near term, the 24,250–24,300 zone is likely to act as the first hurdle. Only a decisive and sustained move above 24,300 could improve the probability of Nifty reclaiming the 24,500–24,600 zone, which could then open the door for a move towards fresh record highs.

On the downside, the 23,800–23,750 zone remains a crucial support area, as it coincides with the 20-day EMA and the 38.2 percent Fibonacci retracement of the recent upmove. As long as this support holds, the broader positive bias remains intact, but a convincing breakout above 24,300 is essential before expecting a sustained move beyond the 24,500–24,600 resistance zone.

Given its recent outperformance, do you expect Bank Nifty to hit a record high before the Nifty 50, possibly as early as July?

Bank Nifty is currently showing relatively stronger technical strength than the Nifty 50, and if this outperformance continues, it has a higher probability of reaching a fresh record high first. However, the index still needs to overcome an important resistance zone before that scenario can unfold.

Last week, Bank Nifty broke out of a 7-day consolidation phase but witnessed profit booking after touching 58,706, resulting in the formation of a High Wave candle on the weekly chart, which reflects some indecision near higher levels.

From a technical perspective, the overall trend remains constructive. The index is trading comfortably above its short-term as well as long-term moving averages, all of which are sloping higher. Momentum indicators also remain supportive, with the daily RSI and Stochastic oscillators firmly placed in bullish territory.

In the near term, the 58,700–58,800 zone is likely to act as an immediate hurdle. A decisive and sustained move above 58,800 could accelerate the uptrend towards 59,500, followed by 60,200, increasing the likelihood of Bank Nifty scaling a fresh record high, potentially ahead of the Nifty 50. On the downside, the 57,500–57,400 zone is expected to provide strong support and keep the broader bullish structure intact.

Do you see the beginning of a new leg of the uptrend in the pharma sector, which has been consistently defending the 23,900 level?

Yes, the pharma sector appears to be entering a fresh leg of the uptrend, especially given its consistent outperformance over the past couple of months. The Nifty Pharma index is currently trading at all-time high levels, which keeps the overall trend firmly bullish, as reflected by its positioning above key moving averages and supportive momentum indicators.

From a technical standpoint, the 20-day EMA zone of 24,500–24,400 is likely to act as a crucial support. As long as the index sustains above the 24,400 mark, the prevailing uptrend is expected to remain intact, paving the way for further upside in the near term.

Which two stocks are currently on your radar for next week?

Samvardhana Motherson has turned technically strong after breaking out of a symmetrical triangle pattern on the daily chart, a bullish continuation setup that signals the potential for further upside. The breakout was accompanied by a healthy surge in volumes, lending credibility to the move and indicating strong buying participation.

Momentum indicators are also supportive, with the RSI witnessing a trendline breakout and moving above the 60 mark, reflecting improving bullish momentum. Further, the widening gap between DI+ and DI- in the ADX indicator highlights increasing bullish dominance. With price action, volumes, and momentum indicators aligned positively, the stock appears well-positioned to extend its upward trajectory in the sessions ahead. Hence, the accumulation is recommended in the stock in the zone of Rs 150-153 with a stop-loss of Rs 145. On the upside, it is likely to test the level of Rs 164 in the short term.

CreditAccess Grameen continues to exhibit strong bullish undertones after witnessing a healthy pullback from its 20-day EMA, which once again acted as a reliable support zone. The stock remains firmly placed above its key short-term and long-term moving averages on both the daily and weekly charts, highlighting a well-established uptrend.

Trend strength is improving, with the ADX rising across both timeframes, indicating increasing bullish dominance. Momentum indicators also remain supportive, as the MACD line stays above both the signal line and zero line, accompanied by rising green histogram bars on the weekly chart. The RSI holding above 60 further reinforces the positive outlook and suggests the potential for continued upside. Hence, the accumulation is recommended in the stock in the zone of Rs 1,450-1,465 with a stop-loss of Rs 1,405. On the upside, it is likely to test the level of Rs 1,570 in the short term.

Would you advise investors to increase their exposure to Max Healthcare Institute at current levels?

Max Healthcare Institute appears well-positioned for further upside from a technical perspective. The stock has recently broken out above a downward-sloping trendline on the weekly chart and continues to trade above its key short- and long-term moving averages, reflecting a strong underlying trend. Momentum remains robust, with the RSI trending higher and holding above the 60 mark on both daily and weekly timeframes.

Additionally, the DI+ crossing above DI- on the ADX indicator highlights increasing bullish dominance. The ratio line of Max Health/Nifty ratio chart has also registered a fresh consolidation breakout, suggesting potential relative outperformance versus the benchmark in the near term. As long as the stock holds above the Rs 1,065–1,070 zone, the positive bias is likely to remain intact.

Does Welspun Corp appear overbought after its near one-way rally since the breakout in April, or do you see further upside potential?

Welspun Corp has rallied nearly 55 percent since its horizontal trendline breakout on April 8, reflecting strong bullish momentum. However, some caution is warranted at current levels. While the stock has registered a fresh price high, the RSI has failed to confirm the move by making a higher high, resulting in a bearish divergence that points to weakening momentum.

Additionally, the weekly ADX has climbed to its highest level since January 2024, suggesting the uptrend may be overstretched. That said, divergence alone does not signal a reversal. The stock continues to respect its rising trendline support around the Rs 1,375–1,370 zone and the broader uptrend remains intact as long as this zone holds. A breach below this zone can trigger profit booking in the stock.