Consolidation before the next rally? What charts say on Nifty, New Years picks and sectors

Listen to this article in summarized format Indian equity markets began the week on a positive note, but momentum faded quickly, with benchmark indices turning largely range-bound over the past couple of sessions. According to Jigar S Patel, Senior Manager - Equity Research at Anand Rathi, the broader technical setup remains bullish, though near-term consolidation is likely. Nifty: Consolidation Before the Next Move Higher From a chart perspective, Patel noted that the Nifty continues to trade above all its key moving averages, 20, 50, 100 and 200-day, signalling an intact uptrend. “In the near term, Nifty is likely to consolidate in the 26,000-26,350 range. We had earlier seen a similar consolidation between 25,700 and 26,000, followed by a breakout. A similar pattern could play out again,” he said. The immediate support is placed at 26,000, followed by a stronger base at 25,700. On the weekly chart, 25,700 remains a crucial level, aligned with the 50-day exponential moving average. “Unless 25,700 is decisively breached, the overall setup remains bullish. The strategy should be to buy on dips, with a stop-loss near 25,700, while all-time highs remain the next upside target,” Patel added. Moving Averages Signal Strength Reinforcing the bullish bias, Patel highlighted that the slope of all key moving averages is upward. “This confirms that the trend is positive. Any correction towards supports should be seen as an opportunity rather than a threat,” he said. Mid-caps: Signs of Revival Emerging After underperforming for several months, mid-cap stocks have started to show relative strength over the past few sessions. “The Nifty Midcap indices are trading above all major moving averages and have taken support near the 22,000 zone,” Patel said. He expects the Nifty Midcap 150 to move towards 23,000-23,200 levels over the next 1-2 months, with strong supports placed around 22,000-22,100. Patel believes mid-caps could outperform large-caps in the near term, especially as several beaten-down stocks show early signs of reversal. Railway Stocks Back in Focus Among mid-caps, railway stocks are drawing renewed interest ahead of the Union Budget. “Several railway names like IRCON, RITES and RVNL have corrected nearly 60% from their July 2024 highs and are now forming base patterns,” Patel said. He pointed out that many of these stocks have shown double-bottom formations near long-term moving averages, suggesting improving risk-reward over the next 2-4 months. Sectoral View: IT, FMCG, Metals IT Sector: IT Sector: The Nifty IT index has witnessed a strong rally from the 33,400 zone to nearly 39,500. While a temporary pause cannot be ruled out, Patel remains constructive on the sector from a medium-term perspective. “Key support for IT lies near 37,500. Any dip should attract buying interest, and the sector looks well-positioned for 2026,” he said. FMCG: FMCG: The FMCG index has been consolidating in a broad 54,000-57,000 range. “This consolidation could eventually resolve on the upside. Stocks like ITC and Nestlé India look attractive for the medium term,” Patel said. He expects ITC to move towards 450-460 levels, while Nestlé India, after breaking...

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