The Nifty is likely to remain positive as long as it holds above the crucial 24,800 support level, although some consolidation after the recent rally would be normal and could help the index build a stronger base for its next leg of gains, said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
The recent swing high of 25,424 remains the immediate resistance for the index. A sustained move above this level would signal a fresh wave of buying momentum, Shah said in an interview with Moneycontrol.
For the coming week, Shah has picked BHEL and Varroc Engineering as his stock recommendations. "BHEL continues to trade above its key moving averages, while the MACD line has crossed above both the signal line and the zero line, accompanied by rising green histogram bars, reinforcing the bullish bias, while combination of technical signals points towards improving bullish momentum in Varroc Engineering," said Sudeep Shah.
Will the consolidation continue next week, with the Nifty 50 holding above the crucial support level of 24,800?
Nifty witnessed a downward-sloping trendline breakout on the weekly chart last week, followed by a phase of consolidation this week, during which the index formed a Doji candle. This indicates a healthy pause after the sharp rally rather than an immediate sign of a trend reversal. On the weekly chart, Nifty has negated its previous lower-low, lower-high structure and has closed above the previous swing-high zone of 24,750–24,800 for the second consecutive week, signalling an improvement in the broader price structure.