The Nifty 50 has achieved a significant technical milestone, closing above its July 8 high and breaking out of its recent trading range with higher trading volumes accompanying the move. According to latest reports, the index has filled the downside gap created during that session, demonstrating renewed buying interest ahead of a week that could be shaped by quarterly earnings from major banks. The pattern of buying at lower levels persisted through the week, resulting in repeated recoveries even as prices remained confined within the broader trading band of 23,785 to 24,531. The index now approaches a key resistance zone near the July 7 swing high of 24,531, with a sustained move above that level potentially paving the way for a test of 24,602, while immediate support is seen at 24,250.
The Nifty 50 is positioned for potential fresh highs as Q1FY27 earnings season has significantly exceeded initial expectations, according to Nimesh Chandan, Chief Investment Officer at Bajaj Asset Management. Speaking to NDTV Profit, Chandan noted that "Q1 earnings look much better than expected" despite persistent global headwinds, with the resilience in corporate performance reinforcing confidence in the broader market. The intrinsic value of the Nifty 50 is estimated at around 27,000, suggesting substantial room for further upward movement. Chandan expects the market to touch a new high in the near term, supported by healthy valuations and valuation comfort beyond frontline stocks making the broader market attractive.
Technical indicators point to improving momentum as the Nifty approaches critical resistance levels. The 10-week moving average has provided support for the past five weeks and continues to trend higher, indicating an improving short-term trend. However, the 20-week moving average continues to slope lower, suggesting that the medium-term trend has yet to turn positive. The index is currently trading 2.11% above its 50-day moving average, though that average remains flat. Bollinger Bands, which had narrowed during recent consolidation, are beginning to expand, typically signaling higher volatility and the potential for a stronger directional move. Momentum indicators have strengthened significantly, with the weekly Relative Strength Index at 51.55 moving higher and the 14-period daily RSI moving above its previous minor high and approaching 60.
According to Chandan's analysis, power and technology sectors have emerged as some of the fastest-growing segments of the market, with continued growth expected in the capital markets ecosystem and consumer discretionary space. The depreciation in the rupee has created a "renaissance" that could benefit certain sectors and businesses. Improving prospects are also visible in the pharmaceutical and healthcare sectors, which are beginning to show signs of buoyancy. However, Chandan advises investors to adopt a bottom-up approach while investing in pharmaceutical companies, focusing on individual businesses rather than taking broad sectoral bets. He cautioned against attempting to predict short-term market movements, emphasizing that investors should focus on identifying fundamentally strong businesses.
