The Indian stock market closed in the red on Friday, with Sensex and Nifty recording slight losses even as oil prices stabilised around $87 per barrel

Sensex fell around 71 points to close at 78,009, while Nifty 50 lost 30 points to end the session at 24,366. Broader markets slipped into the deep red, with Nifty Smallcap 100 and Nifty Midcap 100 indices falling around 0.7% each.

Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty Bank, options data as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Q) Nifty and Sensex struggled for direction this week. Will consolidation continue this week as Q1 is almost over?

A) Since the beginning of August, the benchmark index Nifty has been trading in a narrow range of 500 points. More importantly, the index’s daily trading range has contracted significantly. The daily ATR currently stands at 192 points, its lowest level since the first week of January 2026, highlighting the sharp decline in volatility. But the bigger question is: where is the momentum going once the opening move fades?

In most trading sessions since the start of August, Nifty has witnessed momentum during the first hour, followed by consolidation within a narrow range. This lack of sustained momentum has made intraday and short-term trading increasingly challenging. The broader indices, Nifty Midcap 100 and Nifty Smallcap 100, have also been trading in a narrow range over the last few sessions. With the broader market also losing momentum, the technical setup of Nifty becomes even more important.

Nifty is currently oscillating around its 20-day and 200-day EMAs. The prolonged consolidation has resulted in both moving averages flattening out. The daily RSI is hovering near 52 and remains in a falling mode, indicating that the upside momentum is gradually losing steam. Meanwhile, the daily ADX stands at 11.88 and is also declining, pointing towards a lack of strength in either direction. The loss of momentum and fading trend strength suggest that the next breakout could be pivotal in shaping the market’s near-term direction.

Going ahead, the 50-day EMA zone of 24,200–24,150 will act as an important support for the index. On the upside, the 24,550–24,600 zone will remain a crucial hurdle. A decisive breakout from either side of this range could provide the directional trigger the market has been waiting for. Until then, the market may continue to test the patience of traders and investors.

Coming to Sensex, after registering a high of 79,143 on August 04, the Sensex has gradually drifted lower, though the pace of the decline has been accompanied by a sharp contraction in daily trading ranges. The index's Average True Range (ATR) has fallen to 657 points, its lowest level since the first week of January 2026, indicating a significant reduction in market volatility.

Despite the recent softness, the broader trend remains constructive as the index continues to trade above its 20-day, 50-day, and 100-day EMA levels. However, momentum indicators suggest some loss of upside strength.

The daily RSI has moved into a sideways zone and remains below its 9-day average, reflecting waning bullish momentum. Additionally, the ADX is currently at 10.98, highlighting the absence of a strong directional trend and signaling a lack of conviction from both bulls and bears.

Going forward, the 50-day EMA zone of 77,400-77,300 is expected to act as a key support area for the index. On the upside, the 200-day EMA zone of 78,600-78,700 remains a critical hurdle. A sustained move beyond either of these levels could trigger the next meaningful directional trend in the market.

Q) What is the view on Bank Nifty? Within Bank Nifty also, would you prefer Private or PSU Banks?

A) Bank Nifty continues to remain in a consolidation phase, having traded within a broad 58,706-56,023 range over the past nine weeks. The range has narrowed further over the last three weeks, with the index witnessing subdued volatility and forming a series of small-bodied candles, reflecting indecisiveness among market participants.

The prolonged sideways movement has led to flattening of key moving averages, while momentum indicators remain muted. The daily RSI continues to oscillate in a neutral zone, and the ADX has slipped to 8.99, its lowest level since March 2019, indicating a lack of strong directional strength. As a result, we believe Bank Nifty is likely to remain range-bound until a decisive breakout emerges.

From a levels perspective, 58000-58100 remains an important hurdle, while the 57200-57100 zone is expected to provide crucial support. A sustained move beyond either of these levels could trigger the next trending move in the index.

Within the banking space, we currently prefer PSU Banks over Private Banks. PSU Banks continue to exhibit stronger relative strength and favourable price structure, indicating continued outperformance potential. In contrast, Private Banks have largely been consolidating with bearish bias and are currently showing relatively weaker momentum compared to their PSU counterparts. Therefore, from a tactical and relative strength perspective, PSU Banks remain our preferred segment within the banking space.

Q) What is the options market telling you right now that the cash market isn't? Are you seeing meaningful Call writing or Put writing around key Nifty strikes? Any indications displayed by India VIX or PCR?

A) Since hitting a high of 24,774 on 3rd August, Nifty has been gradually drifting lower. However, volatility has remained subdued, with India VIX largely confined to a narrow 10.10–12.90 range during this period, reflecting an environment of extremely low volatility.

A closer look at the last three sessions suggests that bulls continue to defend lower levels. Although Nifty slipped below the 24,320–24,300 zone, which coincides with the 38.2% Fibonacci retracement of the previous up move, buying at lower levels helped the Index recover and close above 24,300. Nifty has also sustained above its 20-day EMA for the last three sessions, indicating resilience at lower levels.

Options activity further strengthens this view. The 24,300 strike has witnessed significant Put writing, almost three times that of Call writing, making it an important support zone. The same trend is visible at 24,200 and 24,100, where Put writing is nearly 6 times and 16 times higher than Call writing, respectively. Such aggressive Put writing at lower strikes indicates a strong base and suggests limited downside unless Put writers start exiting their positions.

On the upside, the 24,500 strike has seen strong Call writing, nearly three times higher than Put writing, making it an important immediate resistance. A decisive breakout above 24,500, accompanied by short covering, could trigger a swift pullback in the near term.

Overall, the options data does not indicate any significant buildup of bearish positions on the downside, based on the 14th August closing data. The OI PCR had declined from 1.19 at the start of August to 0.75 on 12th August, but has since improved to 0.88 over the last two sessions.

Improving PCR, strong Put writing at lower levels, the bulls’ ability to defend lower levels and Nifty sustaining above its 20-day EMA collectively suggest that the pullback could be around the corner.

Q) Which sector currently looks the strongest & the weakest on the charts?

A) Technically, Nifty India Defence, Consumer Durables, Auto, PSU Banks, and Chemicals are well placed to sustain their relative outperformance in the near term.

Conversely, Nifty CPSE, PSE, Oil & Gas, FMCG, and Cement are likely to remain laggards and continue underperforming the broader market.

Q) Which stocks are looking good on the charts for next week?

A) Based on the current technical setup, Mazagon Dock, HAL, 360 ONE, Ujjivan SFB, Elgi Equipments, Honasa Consumer, Neogen Chemicals, and Glaxo are looking constructive on the charts for the coming week.

Q) What’s your strategy on Tata Motors PV, Tata Motors, Honasa, and Lenskart Solutions?

A) Tata Motors PV stock was consolidating in a Rs 353–334 range since 3rd August. The stock broke down from this range and closed near the lower end. On the weekly timeframe, the 20-week EMA has acted as a stiff resistance over the last two weeks. The Rs 355–360 zone is likely to act as an immediate resistance, with the stock expected to remain under pressure as long as it trades below this zone.

Tata Motors broke out of the Rs 447–398 consolidation range on the weekly timeframe last week, followed by a strong follow-through move this week. The stock continues to trade above key moving averages, while the rising ADX indicates strengthening bullish momentum. The Rs 445–440 zone is likely to act as an immediate support, with the stock likely to extend its up move as long as it holds above this zone.

Honasa had been consolidating in the Rs 491–437 range for the last four weeks. The stock closed above the upper end of the consolidation range this week, supported by a healthy rise in volumes. The RSI has rebounded from the 60 mark and moved higher, indicating renewed bullish momentum. The Rs 475–470 zone is likely to act as an immediate support, with the stock expected to extend its up move as long as it sustains above this zone.

Lenskart hit an all-time high of Rs 627 this week after breaking past its previous resistance zone of Rs 560–580 and closing higher. The stock has also closed above the upper Bollinger Band on the weekly timeframe, a phenomenon often observed during the early stages of strong trends. The Rs 565–560 zone is likely to act as a strong support, with the stock expected to extend its up move as long as it sustains above this zone.