Though the Nifty ended the week near 23,450, not far from where it closed through the week, the sharp volatility on Friday points to reduced risk appetite. The downside close candle thereof, marking the second consecutive weekly red candle, is the first such instance since March.
This also marks the first close in six weeks below the 10-week SMA, hinting at the potential for the start of a downtrend that is not evident on the face of it. That said, Nifty is still held within the recent trading range of 23,152-23,500, a break of which is expected in the current week.
We do not see a runaway move, though, with 22,800-23,650 likely to keep a lid on swings.
Nifty now slipped 1% below the 10-day SMA, dragging all major sectoral indices except for media and Consumer Durables below their respective 10-day SMAs. However, the Nifty Small Cap 250 index is 0.48% above this key short-term moving average.
Meanwhile, FPIs remained visibly bearish through the week, especially in their positioning in index futures. Their long-short ratio in the index futures segment is at 8, approaching record lows. This has come to be as a consequence of a 26% increase in short positions and an 18% reduction in long positions.
With these in the background, we have discussed below two sector themes.
PSU banks positioned for upside as selling pressure eases
The Nifty PSU Bank Ondex continues to consolidate near the 8,250 zone, maintaining its position above a key horizontal support area. On the weekly chart, the formation of a pinbar-doji candle around this support reflects prevailing market indecision while also signalling that selling pressure is gradually being absorbed at lower levels.
From a momentum standpoint, the MACD histogram has started to show contracting bars, indicating a slowdown in bearish momentum. This development raises the likelihood of a potential bullish crossover, provided prices manage to hold current levels.
At the same time, the index is hovering near the Supertrend indicator, which is acting as a crucial dynamic trigger, suggesting that a decisive directional move may be imminent.
Structurally, the index remains confined within a range, with strong support placed around 7,800. Any breakdown below this level would invalidate the near-term constructive outlook and could result in sharper downside pressure. On the flip side, a confirmed breakout above the recent swing highs could pave the way for an upward move toward the 8,600-8,900 zone. Select PSU Banking stocks such as Indian Bank, Canara Bank and Bank Of India are already displaying early reversal patterns and may lead the index higher in the coming sessions.
Nifty FMCG: Early signs of bullish reversal near key Fibonacci support
The Nifty FMCG index is beginning to show encouraging signs of a potential recovery after stabilising near the 61.8% Fibonacci retracement level of the April–May uptrend. The appearance of multiple doji candles around this area indicates a phase of demand absorption, pointing toward the formation of a potential base at lower levels.
Momentum indicators are also aligning with a constructive outlook. The MACD histogram is printing progressively smaller negative bars, reflecting fading bearish momentum and increasing the probability of an upward bounce. This is further supported by price behaviour, as the index has not witnessed aggressive follow-through selling despite recent weakness.
From a structural perspective, maintaining levels above 47,650 remains critical for sustaining the bullish argument. As long as this support holds, the overall risk-reward continues to favour an upside resolution. A gradual breakout above near-term resistance levels could trigger a move toward the 48,950-49,500 range.
Leading FMCG stocks such as ITC, Varun Beverages Dabur India andTata Consumer Products are exhibiting positive setups and are likely to play a key role in driving the index’s potential recovery in the near-term.
Report by Anand James, Chief Market Strategist at Geojit Investments.
Source: FinancialExpress
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