F&O Discuss| Nifty kicks off 2026 with recent all-time excessive, momentum indicators extra upside forward: Sudeep Shah
Expectations round upcoming Q3 outcomes and supportive coverage measures within the Union Finances have helped raise total sentiment. A key issue has been improved participation within the broader market, significantly selective shopping for in mid-cap shares.
With this, analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Analysis at SBI Securities, interacted with ET Markets concerning the outlook for the Nifty and Financial institution Nifty, in addition to an index technique for the upcoming week. The next are the edited excerpts from his chat:
Nifty closed within the inexperienced on the weekly chart and close to its all-time excessive ranges. Will we see the index making a brand new excessive on Monday when the market opens?
Indian equities started the calendar yr on a sturdy footing, with the Nifty registering a recent all-time excessive. After peaking at 26,325 on December 1, 2025, the index entered a part of sideways consolidation, with Nifty buying and selling in a slender vary of 633 factors, marking its tightest month-to-month vary since August 2023.
Momentum decisively picked up over the previous 4 buying and selling periods. From a current swing low of 25,878, the index rallied practically 450 factors, pushed primarily by good points in index heavyweight shares. Reflecting bettering participation, Nifty Futures rollover rose to 72.29% within the December sequence, up from 68.77% in November and marginally above the three-month common of 72.28%, indicating sustained dealer curiosity and a willingness to hold positions ahead.
The sharp rally on Friday pushed the each day RSI above the 60 mark, signalling strengthening momentum and the potential for continuation within the close to time period. Reliance Industries emerged as a key contributor to the upmove, advancing 2.12% throughout the week.
On the sectoral entrance, metals outperformed, with the Metallic Index surging 5.7% over the week as broad-based shopping for lifted most constituents. The headline good points, nonetheless, had been partially offset by a pointy decline in ITC, which fell 13.39% following a authorities notification asserting a major hike in excise obligation on cigarettes.
Going forward, contemplating the present chart construction, the index is more likely to proceed its upward journey and check the 26,500, adopted by 26,700 within the quick time period. On the draw back, the zone of 26,150-26,100 will act as rapid help for the index.
What is the normal view now on the FII exercise? Has the Indian market given any set off to the FIIs to return to us?
The general view on FII exercise stays cautious. During the last six months, FIIs have been web sellers to the tune of practically Rs 1.84 lakh crore and this promoting has continued regardless of Indian markets hitting all-time highs, indicating subdued participation. India additionally underperformed a number of Asian, European, and US markets in 2025, with FIIs clearly preferring different geographies.
One key overhang is the delay within the India–US commerce deal, which has saved overseas traders cautious. Moreover, the sharp appreciation of the US greenback towards the rupee, with the rupee nearing the 91 mark in 2025, has impacted FII returns, lowering the attractiveness of Indian belongings. Positioning knowledge additional displays this warning, because the FII lengthy–quick ratio has persistently remained under 20%, with no main indicators of quick masking.
Nevertheless, with Nifty at all-time highs, the upcoming Q3 earnings season and the Union Finances might act as triggers. Sturdy earnings progress or constructive coverage indicators for overseas traders might assist revive FII curiosity in Indian markets.
Which banking shares can one take a look at now?
Financial institution Nifty has turned structurally robust after breaking out of a downward sloping trendline on the each day chart, adopted by a pointy follow-through transfer that pushed the index to a recent all-time excessive of 60,204 on 2nd January. This breakout reinforces the constructive bias within the banking area.
Inside PSU banks, shares like Indian Financial institution, Union Financial institution, Financial institution of Baroda, Financial institution of Maharashtra and Canara Financial institution look nicely positioned. These shares have posted recent each day chart breakouts, with RSI in a rising mode and holding above 60, reflecting robust bullish momentum. The DI+ crossover above DI- on the ADX additional confirms bettering development energy. Including to this, the ratio line within the PSU Financial institution/Nifty ratio chart has hit a brand new excessive, indicating sustained sectoral outperformance.
Within the non-public banking area, HDFC Financial institution and IndusInd Financial institution seem enticing. IndusInd has damaged out of a downward-sloping trendline, whereas HDFC Financial institution has delivered a consolidation breakout. Each shares commerce above key shifting averages, and the ratio line of the Non-public Financial institution/Nifty ratio chart holding above its 200-DEMA suggests a gradual enchancment in relative efficiency.
There is no stopping the steel pack lately. How sustainable do you assume is that this rally is? And do you might have any prime picks for us?
The steel rally stays structurally robust, however within the close to time period, it seems stretched. The Nifty Metallic index has hit a recent all-time excessive of 11,434, gaining practically 13% since tenth December. The ratio line within the Nifty Metallic/Nifty ratio chart has damaged out of a horizontal resistance and moved greater, clearly signalling sustained sectoral outperformance. Notably, metals had been the top-performing sector in 2025, delivering near 30% returns.
Nevertheless, momentum indicators counsel the rally is overheated. The index RSI stands at 83, the very best since October 2024, pointing to an overbought zone. The index can be buying and selling 6% above its 20-day EMA and about 9% above its 50-day EMA, growing the chance of near-term revenue reserving. Whereas the broader development stays constructive, some consolidation could be wholesome earlier than the subsequent leg up.
Amongst prime picks, Hindalco continues to point out robust relative energy. Jindal Metal has seen a double-bottom neckline breakout, adopted by a strong follow-through, and importantly, held its 200-day EMA, reinforcing long-term bullish construction. Jindal Stainless is consolidating put up a spread breakout and will resume its upmove on a recent breakout. Tata Metal rebounded sharply from its 100-day EMA, with RSI above 60, indicating continuation potential within the quick time period.
What’s the view on the auto sector with the businesses sharing December 2025 auto gross sales numbers? And which shares look poised for additional progress within the sector?
The auto sector continues to stay in a powerful uptrend, supported by encouraging December 2025 gross sales numbers. The Nifty Auto index has delivered a horizontal trendline breakout on the each day chart, adopted by a powerful follow-through transfer. Auto was additionally among the many prime three performing sectors in 2025, alongside metals and PSU banks. Importantly, the index staged a pointy upmove after taking help at its 20-day EMA on thirtieth December, reinforcing the short-term bullish construction. The ratio line in Nifty Auto/Nifty ratio chart has held its upward sloping trendline and moved greater, indicating continued relative outperformance versus the benchmark.
On the stock-specific entrance, Maruti Suzuki has damaged out of its consolidation vary, aided by the Dzire rising as India’s best-selling automotive in 2025, surpassing Creta and Nexon. TVS Motor has posted a horizontal resistance breakout, with DI+ crossing above DI- on ADX, signalling strengthening bullish momentum. M&M has damaged a downward sloping trendline and closed above the higher Bollinger Band for 2 consecutive periods. General, the value construction of those shares seems robust, suggesting additional upside potential.
In reality, the Nifty media index is one other pocket which has taken a help on its weekly chart and stays considerably out of the investor radar. What’s the scope of progress there and which shares are more likely to drive this progress?
The Nifty Media index has proven early indicators of stability after taking help on its weekly chart, with a gradual rebound from the 1,390–1,400 zone on the each day timeframe. Nevertheless, from a relative efficiency perspective, the area stays beneath the radar. The ratio line within the Nifty Media/Nifty ratio chart continues to development decrease, highlighting persistent underperformance versus the broader market. This implies that whereas the pullback is encouraging, a transparent and sustained reversal sign continues to be required to verify a sturdy development change.
Wanting throughout the index, most media shares proceed to commerce under their key shifting averages, reflecting the shortage of broad-based energy within the sector. On the inventory stage, Nazara Applied sciences stands out. The inventory has staged a powerful rebound from the 200–225 zone and closed at 284 on 2nd January. It now trades above all main shifting averages, with rising bullish momentum indicators supporting the transfer.
General, whereas selective alternatives exist, it will be prudent to attend for stronger affirmation of development reversal on the index stage earlier than turning constructive on the media area as a complete.
Do you might have every other sectors in thoughts which might be doing nicely, the place our traders can think about placing their cash?
Nifty Oil & Gasoline: The Nifty Oil & Gasoline index has delivered a powerful breakout by shifting above a downward-sloping trendline on the each day chart. This breakout has been accompanied by sharp bullish momentum, indicating renewed shopping for curiosity throughout the sector. All key momentum indicators are firmly aligned in favour of the bulls, suggesting that the constructive development is more likely to maintain within the close to time period.
Nifty Auto: The Auto index has additionally damaged out of its downward sloping trendline and adopted it up with a swift upward rally. The each day RSI has surged previous the essential 60 mark, confirming strengthening momentum. On the similar time, the MACD histogram is displaying indicators of accelerating upside traction. Given this technical setup, the Auto index is well-positioned to increase its good points within the quick time period.
Nifty PSU Financial institution: The PSU Financial institution index has shaped a powerful base round its 20 day EMA, which acted as a dependable help zone. A pointy rebound from this stage helped the index register a recent all-time excessive on Friday. With momentum firmly within the bullish camp, the index is predicted to proceed its upward trajectory over the approaching periods.
Nifty PSE & Nifty CPSE: Each the Nifty PSE and Nifty CPSE indices posted spectacular good points final week, considerably outperforming the frontline indices. The Nifty PSE index has given a transparent consolidation breakout, reflecting robust accumulation throughout the broader public sector theme. Given the strong momentum throughout each these indices, they’re more likely to prolong their northward journey within the subsequent couple of buying and selling periods.
Past these key outperformers, Nifty Non-public Financial institution, Nifty Monetary Providers, and Nifty Metallic indices are additionally displaying sustained bullish momentum. Their technical setups point out a continuation of the present upward development within the close to time period.
Quite the opposite, the Nifty FMCG index has slipped under an vital help stage, signalling a possible shift in sentiment. The breakdown suggests relative weak spot throughout the sector, and we anticipate FMCG shares to underperform within the quick time period.
Any most well-liked shares?
Technically, TVS Motors, Maruti Suzuki, REC Ltd, PFC Ltd, Bajaj-Auto, Chola Finance, BHEL, Financial institution India, Financial institution Baroda, Glenmark, Indian Financial institution and GMR Airport are more likely to prolong their upward rally.
(Disclaimer: Suggestions, recommendations, views and opinions given by the consultants are their very own. These don’t signify the views of The Financial Occasions)
