Market analyst Rohit Srivastava expects Indian equity markets to remain range-bound in the near term before attempting a decisive breakout. The Founder of Strike Money Analytics and Indiacharts shared his technical outlook with ET Now, highlighting key levels and sector preferences for the coming period.

Nifty Technical Outlook

Srivastava identifies crucial technical levels for the Nifty's near-term trajectory. He expects the index to consolidate around current levels with specific support and resistance zones.

"Over the next couple of days, the Nifty should head towards 26,500, which is an important breakout level. This corresponds to the trend line connecting the previous highs seen between October and November," Srivastava explained. A successful move above 26,500 could generate stronger momentum ahead of the monthly derivatives expiry.

IT Sector: Mixed Signals

The IT sector faces headwinds following reports about changes to the US H-1B lottery system. Srivastava maintains a cautious stance on long-term IT investments while seeing short-term trading opportunities.

"From a trading perspective, the current dip can still be seen as a buying opportunity. The IT index could move towards 40,000 or slightly higher in the short term," he noted. However, he emphasized that IT stocks have historically underperformed broader markets during growth cycles, particularly given modest earnings growth expectations.

Metals Sector Preference for Santa Rally

Looking toward the final week of December, Srivastava expresses optimism about a potential Santa rally, with global markets showing supportive trends across Asian markets and Wall Street. His sector preference focuses on metals.

"The environment is gradually turning favourable for commodities, with a weakening US dollar and rising prices of metals like copper and aluminium," Srivastava observed. He specifically highlighted stocks such as Hindalco and National Aluminium, which have demonstrated strong momentum and could continue outperforming in the near term.

Investment Strategy

Srivastava advises investors to maintain selectivity in their approach, closely monitor key technical levels, and align short-term trades with sectors benefiting from favorable global macro conditions. The combination of technical breakout potential in the Nifty and commodity sector strength presents opportunities for tactical positioning in the current market environment.

The Nifty index exhibited mixed trading behavior during Tuesday's session, opening on a positive note but failing to sustain momentum throughout the day. Market participants witnessed a relatively subdued trading environment as the benchmark index remained confined to a narrow range.

Trading Range and Price Action

The index's movement was characterized by limited volatility, with the entire session's trading confined to a narrow band of approximately 100 points. This restricted range suggests cautious market sentiment and limited conviction among traders.

Technical Pattern Formation

The day's price action resulted in the formation of a Doji-like candlestick pattern on the daily chart. This technical formation is significant as it typically indicates indecision among market participants, reflecting a balance between buying and selling pressure.

Market Dynamics

Despite the positive opening, the Nifty experienced some weakness during the final hour of trading, which prevented any meaningful gains for the session. The index ultimately closed on a flat note, reflecting the overall indecisive nature of the trading session.

Interestingly, the broader trend shows that Nifty has been making higher highs, suggesting an underlying bullish structure despite the day's lackluster performance. This pattern indicates that while short-term momentum may be subdued, the medium-term trajectory remains constructive for the benchmark index.