Defence Index Poised for Gains; Analyst Picks ABB, NALCO Amid Market Volatility

The Indian stock market is caught between two competing forces this week: a broad-based retreat driven by geopolitical alarm, and a sharp rally in defence stocks that suggests at least one corner of the market has found solid ground.

The week began with tension. US-Iran friction sent ripples through global markets, and India felt them acutely. Brent crude climbed to its highest level in 85 weeks on supply concerns. The rupee weakened to 92.30 against the dollar. The India VIX—the market's fear gauge—surged nearly 45 percent to a nine-month high. Against this backdrop, the Nifty 50 benchmark index swung wildly, opening with gaps up and down almost daily as traders wrestled with uncertainty. By week's end, the index had fallen more than 7 percent from its recent record highs, a decline that pushed it below several key moving averages and left technical analysts watching support levels with particular care.

Sudeep Shah, head of technical and derivatives research at SBI Securities, sees the broader market as fragile but not yet broken. The Nifty's 20-day, 50-day, and 100-day exponential moving averages have all turned downward, a sign of weakening near-term momentum. The daily RSI has slipped below 40 and continues falling. The MACD histogram is widening on the negative side, indicating strengthening downside pressure. Yet Shah stops short of calling for capitulation. The crucial support zone sits at 24,300 to 24,350—a previous swing low that aligns with institutional tracking. A decisive breach below 24,300 could accelerate selling toward 24,000 and then 23,800. Resistance lies at 24,800 to 24,850. Given this setup, Shah recommends a sell-on-rally approach: take profits on any upward moves until the Nifty reclaims 25,500.

The banking sector, which had been outperforming until recently, took a sharp hit. Bank Nifty tumbled 4.54 percent last week, forming a large bearish candle on the weekly chart. The index has now slipped decisively below its 20-50-100-day moving averages and is approaching its 200-day EMA—a level watched closely by institutional investors for long-term trend confirmation. The daily RSI fell below 40 for the first time since September 2025. The MACD histogram shows expanding negative momentum. Unless strong buying emerges at lower levels, Bank Nifty is likely to extend its decline. The 200-day EMA zone at 57,400 to 57,500 will act as vital support. A sustained move below 57,400 could trigger further weakness toward 56,800 and then 56,000. Resistance sits near 58,700 to 58,800.

But the defence sector tells a different story. The Nifty India Defence index has just broken a 22-week consolidation phase, forming a sizeable bullish candle on the weekly chart. More tellingly, the ratio chart of defence stocks versus the broader Nifty has broken above a downward-sloping trendline on the daily timeframe—a signal that the sector is entering a fresh phase of relative outperformance. All key moving averages are aligned in favour of the bulls. Momentum indicators point toward strong upside traction. Dips are likely to attract buying interest. Stocks like Mazagon Dock Shipbuilders and Bharat Dynamics have rebounded sharply from recent lows on healthy volume. Their RSI has recovered from below 40, signalling renewed bullish momentum. Both have reclaimed their 20-day exponential moving average, a key short-term support level. As long as they hold above their recent swing lows, the uptrend should extend.

Shah has two specific stock picks for the coming week. ABB India has broken out of a consolidation range between 6,073 and 5,794 rupees. Despite three sessions of sideways movement, the stock held above its 20-day EMA, showing strong short-term support. The RSI rebounded from 53 to settle just above 60, signalling renewed bullish momentum. On Friday's close, ABB moved above the midline of its Bollinger Bands—a technical indicator that suggests strengthening price momentum and higher likelihood of further upside. Shah recommends accumulating the stock in the 6,070 to 6,010 rupee zone with a stop-loss at 5,850. The near-term target is 6,500.

National Aluminium Company (NALCO) has broken out of a February consolidation range between 392 and 329 rupees on healthy volume, indicating strong buyer participation. The RSI is trending higher and has moved above 60. The ADX indicator shows DI+ crossing above DI–, highlighting growing dominance of buyers over sellers. Most notably, NALCO has closed above the upper Bollinger Band for two consecutive sessions—a sign of strong buying pressure and the possibility of continued upward momentum. Shah recommends accumulating in the 398 to 394 rupee zone with a stop-loss at 382. The near-term target is 430.

The market's direction in the coming week will likely hinge on geopolitical developments and shifts in global risk sentiment. The broad indices face a critical juncture: either they hold their support levels and stabilize, or they break lower and accelerate the decline. Meanwhile, the defence sector's breakout suggests that at least some investors are rotating into stocks that benefit from geopolitical tension—a rotation that could continue if global uncertainty persists.