By Anand James
While we had opened last week with doubts whether 23,000 would be reclaimed or not, especially with VIX refusing to ease, we are now at the doorstep of 24,000. VIX has since eased considerably to the vicinity of 15.5, pointing to a massive drop in volatility expectations despite the approach to critical peaks.
FIIs add index future longs
FIIs’ index future position rose by 6.9% on Friday, taking the long proportion to 29.5% of their index future portfolio. However, despite this addition, the longs are still below the 90-day average, suggesting that a reversal is still in the making. Short positions were being unwound through the week, but they still constitute 2.38 times the number of long contracts.
Auto stocks to gain pace
The Auto index has been on a profit-booking mode since September 2024. It retraced around 38.2% of the 2020 low and 2024 high, forming a long-legged doji in the monthly scale. Also, with the weekly SMIO crossing above the zero line and average RSI of stocks around 55, we expect the reversal to continue further towards 21,670 and 22,200 levels in the next few weeks, led by Maruti Suzuki, Tata Motors, M&M, Bajaj Auto, Eicher Motors, TVS Motor and Hero MotoCorp.
Nifty Media Index aims 1880
The Nifty Media Index has been moving within a downward sloping trend channel since December 2023 and bounced off the lower trendline of the channel in February 2025. The reversal has gained strength with weekly MACD breaking above the signal line, weekly RSI rising from the oversold region, and a weekly range break pointing towards more room on the upside. We expect Suntv, Saregama, Zeel, PVRINOX, Tipsmusic and Nazara to lead the index towards the upper end of the channel of 1880 levels.
Can Bank Nifty continue the outperformance?
Bank Nifty and Nifty started the present burst from different points, for which reason, while the former is above the upper Bollinger band, the latter is yet to test its upper band.
From the 7th April’s low, Bank Nifty has catapulted over 10% by Friday’s close, while Nifty almost matched this by rising by a little over 9%, during the same period. While the Bollinger band points to extreme positioning, leading to a dip or a time correction, being in close vicinity of the September peak is also a reason to be cautious. However, given the fact that this is the highest close since September, with just the September high standing its way, it is possible that momentum may favour Bank Nifty’s ongoing surge after a brief lull. Key supports are at 53,732 and 52,911.
Nifty outlook
We had gone in last week with eyes on 23,400 and 24,000 as potential upside targets, but were not willing to commit on upside, as we were concerned about VIX unrelenting to ease. Volatility subsided through the week, encouraging a more confident take on the upside objectives, but this freedom was not forthcoming as we pulled up the chart initially.
Though the Nifty index is about to test the upper Bollinger band, 22% of its constituents are still in the first half of the band, suggesting that more leaders may emerge. Further, more than half of the gains in Nifty on Friday came from just four stocks, namely, ICICI Bank, Reliance Industries, HDFC Bank and Bharti Airtel, pointing to the scope of more legs to the rally in the coming days, if more biggies join in. In fact, these were the same four stocks that contributed about half the 1674-point rise since the 7th Friday. Notably, IT, Autos, and FMCG appeared half-hearted on Friday.
Meanwhile, the index is very close to the March peak of 23,869, pointing to prospects of a pullback. That said, the Bollinger band has begun to curve upwards after being on a parallel track for a while, pointing to the potential for more upside surprises. Oscillators are yet to show exhaustion because we were at oversold positions just a week earlier. Hourly charts look exhausted, though pointing to the prospects of a dull opening, but should we not see past 23,600, then 24,000 is on the cards, with 23,400 and 22,930 as critical supports on the downside.
About author
The author is Anand James, Chief Market Strategist at Geojit Investments.
Disclaimer
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.