The charts need to show stabilization first
India's equity markets stand at a crossroads this February, as the Nifty 50 retreats from recent highs and investors weigh the difference between a healthy correction and the beginning of something more prolonged. The 25,300 level has become a line in the sand — a threshold that separates orderly consolidation from deeper uncertainty. Yet even within this cautious landscape, select stocks are tracing their own upward paths, reminding us that markets are never monolithic, and that discipline in reading signals often matters more than the direction of the broader tide.
- The Nifty 50 has shed nearly 550 points from its recent peak, slipping below multiple key moving averages as profit-taking accelerates at elevated levels.
- The IT sector is bearing the sharpest pain — down over 14 percent in a month, with every constituent trading below declining moving averages and no technical signs of a floor forming.
- Bank Nifty is holding its ground near 60,000, consolidating quietly while the rest of the market churns, with the 60,600–60,700 zone standing as the gate to any renewed bullish conviction.
- Bajaj Finance and Eicher Motors are cutting against the grain, flashing genuine breakout signals — rising RSI, expanding MACD momentum, and volume-backed moves that suggest their corrections may already be behind them.
- Analysts are pointing selective investors toward LT Foods and Max Financial Services as actionable opportunities, while urging patience on Piramal Pharma and CG Power until clearer breakout confirmations emerge.
The Indian stock market is navigating a tense correction this week. The Nifty 50 has pulled back sharply from its recent high of 26,009, losing nearly 550 points in just two sessions as profit-taking intensified. Technical analyst Sudeep Shah of SBI Securities has identified the 25,300–25,350 zone as the critical support floor — a breach there could send the index cascading toward 25,100 and eventually 24,900. On the upside, the 50-day EMA band near 25,650–25,700 is expected to cap any near-term recovery.
The Nifty IT index has become the most visible casualty of the broader weakness. A staggering 8 percent decline last week pushed monthly losses beyond 14 percent, with every constituent now trading below downward-sloping moving averages. Momentum indicators remain deeply negative, and Shah cautions against bottom-fishing until the technical structure shows genuine signs of stabilization.
The broader Nifty 50 has slipped below its 20-, 50-, and 100-day exponential moving averages, with the shorter averages now beginning to slope downward — an early warning of strengthening bearish momentum. The daily RSI failed to reclaim the 60 level during the recent bounce and has since fallen below its 9-day average, suggesting limited upside traction ahead.
Bank Nifty offered a relative bright spot, ending last week largely unchanged despite the volatility. It continues to hold above its key moving averages, with the 60,000–59,900 zone providing immediate support and 60,600–60,700 serving as the resistance that must be cleared to revive bullish sentiment.
Amidst the caution, Bajaj Finance and Eicher Motors are standing apart. Bajaj Finance has broken above a downward trendline, with RSI rebounding from 39 to 56 and directional indicators turning favorable. Eicher Motors posted a post-earnings breakout above its prior swing high on rising volumes, closing above the upper Bollinger Band for three consecutive sessions — a hallmark of powerful trending phases.
For investors seeking to deploy capital, Shah recommends accumulating LT Foods in the 428–433 rupee range, targeting 460 with a stop-loss at 410, and Max Financial Services in the 1,810–1,830 rupee zone, targeting 1,960 with a stop at 1,750. Both stocks show trendline breakouts backed by improving momentum. For Piramal Pharma and CG Power, the advice is patience — both remain range-bound, and only decisive moves above key resistance levels would warrant fresh bullish positions.
The Indian stock market is caught between two competing forces this week. The Nifty 50 has retreated from its recent high of 26,009, shedding nearly 550 points over the final two trading sessions as profit-taking pressure mounted at elevated levels. Technical analysts are now watching the 25,300 to 25,350 zone as the critical floor that will determine whether the correction remains orderly or deepens into something more serious. According to Sudeep Shah, head of technical and derivatives research at SBI Securities, a decisive break below 25,300 could trigger a cascade of selling that carries the index down to 25,100 and eventually the key support at 24,900.
The weakness has been particularly acute in the Nifty IT index, which has become a barometer of broader market anxiety. Last week alone, the IT pack plunged more than 8 percent, extending its losses for the month beyond 14 percent—one of the sharpest declines in recent memory. Every single constituent in the index is now trading below its major moving averages, which are all sloping downward in a formation that typically precedes further weakness. Momentum indicators remain deeply negative, offering no early signals of stabilization. For investors tempted to buy the dip in technology stocks, Shah's message is clear: the charts do not yet suggest the bottom is near. The technical structure needs to show evidence of stabilization before bottom fishing makes sense.
The broader Nifty 50 tells a similar story of deteriorating short-term momentum. The index has slipped below its 20-day, 50-day, and 100-day exponential moving averages—a shift that signals erosion in both near-term and medium-term trend strength. More tellingly, the 20-day and 50-day moving averages have begun to slope downward, often an early warning sign that bearish momentum is strengthening. The daily RSI, a measure of buying and selling pressure, failed to cross back above the 60 mark during the recent bounce and has now fallen below its 9-day average, suggesting that any upside traction could remain limited in the near term. On the resistance side, the 50-day EMA band around 25,650 to 25,700 is expected to act as a strong barrier to further gains.
Not all segments of the market are weakening at the same pace. Bank Nifty, the banking sector index, outperformed the broader market last week, ending largely unchanged despite the volatility elsewhere. For the first four sessions, it traded within a narrow 431-point range, suggesting a consolidation phase. Friday brought a dip below that established range, hinting at early weakness, but the index continues to hold above its key moving averages, which maintain an upward slope. The 20-day EMA zone around 60,000 to 59,900 is expected to serve as immediate support, with the 50-day EMA near 59,467 providing a second line of defense. On the upside, the 60,600 to 60,700 region remains critical resistance; only a convincing close above this zone would revive bullish momentum.
Amidst the broader market caution, two large-cap stocks are showing genuine bullish signals. Bajaj Finance has broken above a downward-sloping trendline on the daily chart, a shift that marks the end of its correction phase and the beginning of a fresh uptrend. The weekly three-outside-up pattern signals a bullish reversal, while the RSI has rebounded sharply from 39 to 56. The directional indicator in the ADX has crossed above its counterpart, reflecting improving directional strength, and the MACD histogram bars are contracting, showing that selling pressure is fading. Eicher Motors has delivered an even more dramatic move, posting a post-earnings breakout above its prior swing high with strong follow-through and rising volumes. The MACD histogram bars are expanding, confirming bullish momentum, and the stock has closed above the upper Bollinger Band for three straight sessions—a pattern typically seen in powerful trending phases.
For investors looking to deploy capital during the current weakness, Shah recommends two stocks. LT Foods broke above a downward-sloping trendline on February 3 and, after initially lacking follow-through, retested the breakout zone and bounced strongly. The MACD remains well above both the signal line and zero, reflecting firm bullish bias, while the RSI is steadily rising. The stock is trading near the upper Bollinger Band, a behavior seen in strong uptrends. Shah suggests accumulating in the 428 to 433 rupee zone with a stop-loss at 410, with a near-term target of 460. Max Financial Services has delivered a horizontal trendline breakout backed by steady follow-through and rising volumes. The stock has closed above the upper Bollinger Band for two consecutive sessions, typically a sign of strong momentum during powerful trending phases. Rising MACD histogram bars point to accelerating bullish momentum, and the financial services sector is outperforming the broader Nifty. Shah recommends accumulating in the 1,810 to 1,830 rupee zone with a stop-loss at 1,750, targeting 1,960 in the near term.
For other stocks under scrutiny, Shah advises caution. Piramal Pharma has been consolidating in the 155 to 168 rupee range for about nine sessions after a prolonged downtrend since December 2024, but the broader lower-high, lower-low structure remains intact. Only a strong breakout above the 180 to 185 rupee resistance zone would revive a firm bullish view. CG Power and Industrial Solutions is similarly stuck in a tight 651 to 695 rupee range after an early-February gap-up. With RSI plateaued and ADX easing, a decisive move above 700 to 705 rupees is needed to confirm a consolidation breakout.
Notable Quotes
A decisive breach below 25,300 may open the door for further downside towards 25,100, followed by the key 24,900 level— Sudeep Shah, Head of Technical and Derivatives Research, SBI Securities
Bottom fishing appears premature unless the charts begin to show evidence of stabilization— Sudeep Shah on Nifty IT index weakness
The Hearth Conversation Another angle on the story
Why does the Nifty IT index matter so much right now? It's just one sector.
Because it's a leading indicator of broader market health. When all 50 constituents are below their moving averages simultaneously, it's not noise—it's a structural shift. It tells you the selling is systematic, not random.
So you're saying the worst isn't over for IT stocks?
Not yet. The charts need to show stabilization first. That means a stock holding above a key moving average, momentum indicators turning less negative, volumes contracting on down days. We're not seeing that yet.
What about Bajaj Finance and Eicher Motors? Why are they different?
They've both broken above resistance levels with follow-through and rising volumes. That's not hope—that's confirmation. The technical structure has shifted from correction to uptrend. The momentum indicators are improving, not deteriorating.
If the Nifty breaks below 25,300, how far could it fall?
First to 25,100, then the key level at 24,900. But the real question is what happens before that. If the 50-day moving average around 25,650 can't hold, the selling accelerates. That's when you know the correction is becoming something deeper.
Bank Nifty seems to be holding up better. Should investors rotate there?
It's consolidating, not rallying. It's above its moving averages, which is positive, but momentum is neutral. It's waiting for a signal. Until it breaks convincingly above 60,600, it's just treading water.
You're recommending LT Foods and Max Financial Services. What makes them different from the broader weakness?
They've both broken above resistance with rising volumes and accelerating momentum. The MACD is expanding, not contracting. They're swimming against the tide successfully. That's rare enough to pay attention to.