NewsStocksNifty 50 Faces Critical Test at 25,300 Support; Bharat Electronics Emerges as Key PickNifty 50 Faces Critical Test at 25,300 Support; Bharat Electronics Emerges as Key Pick
Technical analyst Rahul Ghose warns of potential Nifty 50 decline to 24,800-24,900 if crucial 25,300 support breaks, following the index's retreat from 26,350 highs and break below 50-day moving average. He recommends Bharat Electronics as a strong buy-on-pullback candidate amid defence sector strength, and Titan Company around ₹3,990-4,070 levels. Gold appears extremely overbought with consolidation expected as Dollar Index strengthens to one-month highs.
*this image is generated using AI for illustrative purposes only.
Market technician Rahul Ghose, founder and CEO of Octanom Tech and Hedged.in, has identified critical support levels for Nifty 50 while highlighting selective stock opportunities amid current market volatility. The benchmark index faces a crucial test at 25,300 levels, with potential for significant downside if this support fails to hold.
Nifty 50 Technical Outlook
The Nifty 50 has retreated from all-time highs near 26,350, with recent sessions showing clear negative closes and more declining stocks than advancing ones, indicating supply pressure at elevated levels. A key technical development has been the break below the 50-day exponential moving average (DEMA) after three months, which has shifted short-term sentiment to negative.
| Key Nifty Levels: | Price Points |
|---|---|
| Critical Support: | 25,300 |
| Downside Target 1: | 24,900 |
| Downside Target 2: | 24,800 |
| Resistance Level: | 25,940 |
Ghose warns that if markets sustain below the 50 DEMA for a couple of days and the 25,300 level breaks on the weekly chart, a decline to 24,900-24,800 cannot be ruled out. However, any strong positive price action supported by good volumes could make this a false breakdown.
Strategic Stock Recommendations
Bharat Electronics emerges as Ghose's top pick, particularly in the context of the current geopolitical situation that makes the entire defence sector promising. The stock presents a clear buy-on-pullback opportunity with both weekly and monthly charts remaining bullish and no significant resistance on the upside.
Titan Company offers another opportunity around ₹3,990-4,070 levels on pullbacks. The recommendation is supported by strong quarterly updates from the gems and jewellery segment, with the stock making all-time highs in uncharted territory. Technical indicators show RSI levels of 65-70 on weekly and monthly charts, suggesting further upside potential.
| Stock Recommendations: | Entry Levels | Rationale |
|---|---|---|
| Bharat Electronics: | On pullback | Bullish charts, defence sector strength |
| Titan Company: | ₹3,990-4,070 | Strong quarterly updates, technical breakout |
Gold and Dollar Index Analysis
Gold currently appears extremely overbought across all timeframes - daily, weekly, and monthly. While rate cut expectations and geopolitical situations have supported the commodity's recent upswing, Ghose notes developing strength in the Dollar Index, which has reached one-month highs. Historically, gold tends to underperform in a rising dollar environment.
The precious metal has a high probability of moving sideways or consolidating at current levels. For potential buyers, ₹1,25,000-1,28,000 per 10 grams would represent attractive entry levels on pullbacks, approximately 5-7% below current prices.
Banking Sector Outlook
For IIFL Finance, currently trading at monthly resistance levels, Ghose advises waiting for a decisive close above recent highs of ₹679 before building fresh long positions. State Bank of India, while being an outperformer in the public sector banking segment, has become extremely overbought in the recent run-up. A short-term pullback cannot be ruled out, with ₹800-820 representing good buying levels on any decline.
Trading Strategy
Ghose's tactical approach for the coming week involves monitoring key levels closely. If Nifty manages to close above 25,940 (Friday's high) in the next couple of trading sessions, it should be treated as a false breakdown with long positions considered. Conversely, a slip below 25,300 would warrant short positions targeting 24,800 levels.
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