Chartist Talk: Do charts and indicators confirm Nifty could break below 23,000 next week? Sudeep Shah…

Fresh updates from the financial markets indicate that According to Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, the 23,000–23,100 zone stays a crucial backing area for the Nifty and will be the key level to watch over the upcoming week.

While the index has corrected sharply from its recent high of 24,774, a breakdown below 23,000 has not yet been confirmed. Given the significance of this backing zone, some consolidation or buying interest could emerge around these marks, he stated in an interview with Moneycontrol.

Shah believes the chances of sustained buying interest in HDFC Bank the week ahead stay bleak as long as the stock trades below the Rs 755–760 zone.

In the case of Paytm, he stated technical and momentum indicators stay in a bullish phase. As long as the stock sustains above Rs 1,650–1,660, the bullish structure stays intact, increasing the possibility of further upside and a potential move above its record high the week ahead.

Do you expect HDFC Bank to see continued buying interest the week ahead as well?

HDFC Bank has broken below its important backing zone of Rs 725–720 on the weekly chart and drifted softer, indicating continued softness. The stock is trading significantly below its key moving averages, highlighting softness in the broader trend.

The immediate resistance for the stock is placed in the Rs 755–760 zone. As long as HDFC Bank trades below this zone, the chances of seeing sustained buying interest the week ahead stay bleak.

Are you confident that Paytm could surpass its record high the week ahead?

One 97 Communications (Paytm) has been forming a elevated-high structure on the daily chart and keeps trade comfortably above its key moving averages, indicating sustained bullish momentum. The DI lines have widened, with DI+ placed above DI- on the ADX indicator, highlighting firm control of the bulls over the bears.

The 20-day EMA zone of Rs 1,650–1,660 is likely to act as an immediate backing. As long as the stock sustains above this zone, the bullish structure stays intact, increasing the possibility of further upside and a potential move beyond its record high the week ahead.

Do you expect the Nifty 50 to consolidate above the 23,000 backing level the week ahead, or is there a firm possibility of the index breaking below this backing?

The 23,000-23,100 zone stays a crucial backing area for the Nifty and will be the key level to watch over the upcoming week. While the index has corrected sharply from its recent high of 24,774, a breakdown below 23,000 is not yet confirmed. Given the significance of this zone, some consolidation or buying interest can emerge around these marks.

That stated, the overall market structure stays weak. Nifty has closed in the red for five consecutive weeks and has declined more than 6 percent from its August peak. The index is trading below its key short and long-term moving averages, while momentum indicators keep signal softness. The daily RSI has eased into oversold territory and the weekly RSI is additionally trending softer, reflecting a lack of positive momentum.

In addition, external factors such as escalating geopolitical tensions, elevated oil price marks and elevated US bond yields keep weigh on investor sentiment, increasing the risk of intermittent volatility.

From a technical perspective, the 23,000-23,100 band represents a firm confluence of the 61.8 percent Fibonacci retracement of the previous surge from 22,182 to 24,774 and a key prior swing low. As long as this backing holds, the index may attempt to stabilize and consolidate. That stated, a decisive breach below 23,000 could accelerate selling pressure and open downside targets towards 22,800 and 22,500.

On the upside, 23,600-23,650 stays the immediate resistance zone. A sustained move above this hurdle would be the first indication that the ongoing corrective phase is losing momentum and that a meaningful recovery could unfold. Until then, traders should maintain a wary stance and focus on risk management.

Do you see a greater possibility of the Nifty Bank moving elevated towards 57,000–57,500 rather than breaking below Friday’s low the week ahead?

Yes, at this stage, the probability of Bank Nifty moving towards the 57,000-57,100 zone appears elevated than a breakdown below Friday's low, primarily due to the firm buying interest witnessed near its previous swing-low backing.

The index has relatively outperformed the broader market and formed a weekly candle with a long softer shadow, indicating that buyers are actively defending softer marks. Additionally, Bank Nifty is attempting a rebound towards its 200-day EMA and is anticipated to consolidate closer to this zone for the coming few sessions.

While the index keeps trade below its short and medium-term moving averages, momentum indicators suggest consolidation rather than a fresh leg of slide. The rebound in RSI from softer marks additionally points towards easing selling pressure.

Going ahead, the 56,000-55,900 zone stays critical. As long as the index sustains above this backing band, it is likely to witness a recovery towards 57,000-57,100. A decisive breakout above 57,100 could further strengthen momentum and pave the way for an extension towards 58,000. That stated, a breach below 55,900 would negate the positive view and gain the risk of a deeper correction.

Do you expect the follow-up buying interest in Blue Star to continue the week ahead?

Blue Star has witnessed firm buying interest from its earlier backing zone of Rs 1,430–1,450 on the daily chart. The RSI, which had remained flat, has now turned elevated, indicating a pickup in bullish momentum. The stock has additionally reclaimed its 20-day and 50-day EMAs, signalling an improvement in short-term sentiment.

As long as the stock sustains above the Rs 1,430–1,450 backing zone, the recent positive momentum stays intact, and follow-up buying interest could continue the week ahead.

What are your top two stock picks for the week ahead?

LIC Housing Finance has witnessed a firm pullback of nearly 16 percent since the low of Rs 485 made on August 24. Since late August, the volumes have picked up steadily in the counter. The stock now trades above key short and long term moving averages. The RSI has witnessed turned slightly elevated from the 60 mark on the daily timeframe, indicating renewed bullish momentum.

The MACD on the weekly chart has crossed above the zero line, signalling buildup of momentum on the upside. The stock now trades just marginally below its downward sloping trendline resistance on the weekly chart with the current price action and indicators signaling a possibility of a breakout in the near term. Hence, the accumulation is recommended in the zone of Rs 560-565 with a stop-loss of Rs 540. On the upside, it is likely to test the level of Rs 605 in the short term. Five-Star Business Finance

Five-Star Business Finance was consolidating in the Rs 540–513 zone since the last 11 trading sessions. The stock has given a breakout from the range, supported by a healthy climb in the volumes. The DI+ has crossed over DI- in the ADX indicator, indicating that the bulls are trying to assert their dominance over the sellers.

The RSI, which was flat, has turned elevated, post the breakout, indicating renewed bullish momentum. Additionally, the MACD line has marginally crossed over the zero line with histogram bars starting to climb, further reinforcing bullish bias. Sustained momentum could pave the way for further upside. Hence, the accumulation is recommended in the zone of Rs 545-555 with a stop-loss of Rs 530. On the upside, it is likely to test the level of Rs 590 in the short term.