Expert view: Rajesh Palviya of Axis Securities on Nifty 50, Bank Nifty outlook, preferred technical strategy and more

Expert view on markets: Rajesh Palviya, SVP - Research, Axis Securities, is positive about the Indian stock market and believes that as long as the Nifty 50 holds above the 25,700–25,900 band, the prevailing directional bias will remain positive. For Bank Nifty, key support zones for any intraday or short-term pullbacks lie at 59,000 to 58,700, says Palviya. For the mid and small-cap segments, he says recent volatility is more like a healthy consolidation than the start of a deeper correction. In an interview with Mint, Palviya shared his views on market structure, sectors, as well as stocks he finds poised for upside. Here are edited excerpts of the interview:

What is your near-term technical outlook on Nifty 50 and Bank Nifty?

The Nifty index continues to demonstrate a strong bullish trend, trading well above its key moving averages (20, 50, 100, and 200 DMA) and remaining firmly within a multi-month ascending channel.

The immediate support range of 25,900 to 25,700 is reinforced by the convergence of significant technical factors, with an additional crucial support cluster situated at 25,700. This zone coincides with the 50-DMA, lower channel support, and the area of the previous breakout.

As long as the Nifty holds above the 25,700–25,900 band, the prevailing directional bias remains positive, making the "buy on dips" approach the optimal strategy.

Upside targets for the near term are outlined at 26,350 (channel extension/top), followed by the 26,500–26,600 region for the December series, with a further move toward 27,000 possible if global risk sentiment continues to favour equities.

Bank Nifty remains the market’s leading force, having recently set new all-time highs and closing last week with decisive bullish candles on both daily and weekly charts.

This performance reflects robust institutional buying, particularly from domestic participants.

Key demand (support) zones for any intraday or short-term pullbacks lie at 59,000 to 58,700, while the supply area is established between 60,200 and 60,600, a range likely to see consolidation or profit-taking in major banking stocks before any further upward momentum.

In summary, market structure and technicals for both indices are supportive, and any decline toward critical support levels should be seen as an opportunity to accumulate positions.

Mid- and small-cap indices have seen volatility recently. Does the technical structure indicate a deeper correction or a healthy consolidation?

Recent volatility in the mid and small-cap indices appears more like a healthy consolidation than the start of a deeper correction. After a strong multi-month rally, some cooling off is natural as markets digest gains.

As long as key support levels remain intact and broader sentiment stays constructive, the technical structure does not yet indicate a structural trend reversal.

Technically, both indices continue to trade within their rising channels, and pullbacks have so far been contained near the 20 and 50-day moving averages.

Indicators such as the MACD are flattening but not crossing into negative territory, suggesting a digestion of gains rather than a trend reversal.

Which sectors currently display the strongest technical momentum or breakout patterns, particularly on weekly charts?

Defensive sectors such as IT and pharmaceuticals, which have previously lagged, are now showing initial signs of basing patterns, with early bottoming signals and bullish RSI divergences evident in the weekly charts of select large-cap stocks.

However, cyclical and financial sectors continue to demonstrate clear leadership. For a significant reversal in the defensive sectors to materialise, there needs to be decisive closes above recent swing highs and the 200-week moving average.

Without these developments, it’s prudent to view any rallies as short-term bounces within an ongoing basing phase, rather than as shifts in trend.

On a weekly timeframe, PSU banks, autos, and certain capital goods stocks are leading in momentum.

PSU banks are exhibiting volume-backed trendline breakouts, autos are showing resilience by maintaining levels above the 20 and 50-week EMAs, and capital goods are consolidating near all-time highs.

Meanwhile, pharmaceuticals are starting to indicate potential for a base breakout, suggesting the possibility of a medium-term revival amid broader sector rotation that favours cyclical sectors.

How do FII–DII flow trends reflect in market breadth and technical indicators such as RSI, MACD, and moving averages?

FIIs remain net sellers, exercising caution due to rising U.S. yields and rupee depreciation pressures, while DIIs deliver strong counter-buying through monthly inflows that offset FII outflows and limit market declines.

This FII-DII tug-of-war manifests in a narrow large-cap advance amid wider consolidation, with selective strength evident in market breadth and indicators.

The technical setup reflects a range-bound index, with the RSI holding steady, a bullish MACD above its signal line, and prices staying above the 20- and 50-day moving averages, even as intraday advance–decline ratios remain volatile on days of negative FII flows.

DII resilience, including retail SIPs, sustains indices near record highs even as FIIs flip intermittently to selling.

Are there signs of a potential reversal in underperforming sectors like IT or pharma from a technical standpoint?

Both the IT and pharma sectors, which have recently experienced underperformance, are beginning to exhibit early technical signs of a potential reversal, although confirmation is still in progress.

In the IT sector, several large-cap stocks have formed higher lows on their weekly charts, and momentum indicators, such as the Relative Strength Index (RSI), are recovering from oversold levels.

The sector index has managed to reclaim its 20-week moving average, a key early indicator of a trend shift.

Sustained closes above this level, coupled with rising volumes, would strengthen the case for a medium-term recovery.

In the pharma sector, the technical outlook appears more positive. Multiple stocks are building multi-month bases, and weekly MACD crossovers indicate an improvement in momentum.

Prices moving above short-term moving averages suggest accumulation following a phase of consolidation, and a breakout above major resistance could trigger a broader upward trend.

Overall, both sectors are showing early signs of bottoming patterns. However, more decisive price movements and broader market participation are needed for complete confirmation.

What is your preferred technical strategy for traders in the current market—momentum, breakout trading, or buying on dips?

The preferred strategy in the current market is to buy on dips in structurally strong, up-trending sectors and stocks.

Nifty, Bank Nifty, automotive, PSU banks, pharma, and quality large-cap stocks are all in clear rising channels, trading above all key moving averages, and are supported by strong domestic institutional investor (DII) and systematic investment plan (SIP) liquidity.

Over the past six months, every dip of 3–7% has been aggressively bought.

The risk-reward ratio remains excellent. Currently, while the indices are at near all-time highs, they are underpinned by strong domestic liquidity.

The recommended approach involves a combination of buying dips in index heavyweights and engaging in momentum or breakout trading in sectors that show relative strength, such as banking, capital goods, and select automotive stocks.

Position sizing and strict stop-losses are critical because elevated valuations and intermittent Foreign Institutional Investor (FII) outflows can lead to rapid reversals.

Traders should avoid chasing parabolic moves in smaller stocks and instead focus on high-conviction patterns backed by volume and trend alignment on daily and weekly charts.

Some stocks that are likely to show bullish trends in the coming weeks include Ashok Leyland, Glenmark, Biocon, Union Bank, Federal Bank, Asian Paints, Vedanta, Hindustan Zinc, Wipro, Mphasis, and Siemens.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.