The Indian stock market closed higher on Friday as a sharp surge in heavyweight IT stocks helped the market record gains after a two-day losing streak.

Sensex gained 331 points to close at 77,264 while Nifty 50 rose around 85 points to end the session at around 24,176 on Friday. The broader markets also closed in the green as India VIX, which measures market volatility, dropped more than 4%.

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

1.) We saw sharp and extremely divergent moves in the Nifty and Sensex this week amid CAS. How should traders navigate?

Traders should focus on risk management and avoid taking aggressive directional bets until the market stabilises. The sharp divergence and heightened volatility indicate uncertainty, making stock-specific opportunities more attractive than broad index exposure. From a technical perspective, Nifty has been consolidating near a crucial support zone around 24000, while key resistance is placed near 24,250-24,300. A decisive breakout on either side is likely to determine the next trend. Until then, traders should maintain a cautious stance, follow strict stop losses, reduce leveraged positions, and focus on sectors and stocks exhibiting relative strength.

2.) How are charts looking for Nifty and Sensex for the coming week? Expect consolidation to continue?

Nifty View: Over the last seven trading sessions, the benchmark index Nifty has been oscillating within the narrow range of 24,379–24,077 levels, highlighting the ongoing consolidation. The index failed to sustain above its 200-day EMA and thereafter witnessed a correction. Eventually, Nifty ended the week near the 24,200 mark, marking its third consecutive weekly decline. With the index caught in a phase of consolidation, the crucial question is whether bulls or bears will dictate the next leg of the market's journey.

The answer may lie in the indicators. Currently, the index is trading below all its crucial moving averages. However, most of these moving averages have turned flat, reflecting the lack of a decisive trend amid the prevailing sideways momentum. The momentum indicators and oscillators are also pointing towards continued consolidation. The daily RSI has remained in the sideways zone for the last 13 trading sessions, while the Stochastic is also oscillating within a range. With momentum indicators refusing to take a clear side, the price levels now hold the key to the next directional move.

And that brings the focus back to the crucial support zone. Going ahead, the 24,000–23,950 zone will act as an important support for the index, as the prior swing low and upward-sloping trendline are placed in that region. A sustainable move below 23,950 could trigger further correction towards 23,700 in the short term.

On the upside, the 20-day EMA zone of 24,250–24,300 will remain a crucial hurdle for the index. A decisive move beyond either of these zones could finally reveal which side has gained the upper hand.

Sensex View: The benchmark index Sensex has been consolidating within a narrow range of 1053 points over the past seven trading sessions. Notably, it has closed lower for the third consecutive week, resulting in the formation of a bearish weekly candle and reflecting a cautious market undertone.

From a technical perspective, the index continues to trade below its key moving averages, although these averages have largely flattened, indicating the absence of a strong directional trend. Momentum indicators and oscillators also point towards a phase of consolidation, suggesting that the market is likely to remain range-bound in the near term.

Going forward, the 76,600-76,500 zone is expected to provide crucial support. On the upside, the 100-day EMA region of 77,500-77,600 remains a significant resistance. A decisive move beyond either of these levels could set the tone for the index's next directional trend.

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3.) Where are you seeing a strong option position right now, and which Nifty strikes could act as immediate support or resistance zones going into next expiry?

Nifty has been consolidating within the 24,379–24,091 range for the last seven trading sessions. After breaking below the rising trendline support on August 27, drawn by connecting the lows of 22,183 and 23,072 recorded on April 2 and June 11, respectively, the index has reclaimed the trendline and marginally closed above it, indicating some recovery in sentiment.

For the current weekly expiry, 24,000 is likely to act as an immediate support, with Put writing nearly eight times higher than Call writing. On the upside, 24,400 is likely to act as an immediate resistance, with Call writing nearly six times higher than Put writing.

Hence, the immediate trading range for Nifty is likely to remain between 24,000 and 24,400. A decisive breakout on either side of this range could set the tone for the next directional move in the index.

4.) What’s your strategy for HDFC Bank as the lender hit a fresh 52-week low? Sugar stocks have been doing well; what should investors do now?

HDFC Bank has broken below its important support zone of Rs 725–720 on the weekly chart. The stock is currently trading below key moving averages, indicating weakness in the broader trend. RSI is declining and approaching the 30 mark, pointing towards strengthening bearish momentum. The DI- remains above the DI+ on the ADX indicator, highlighting the bears’ strong control over the bulls.

The next crucial support for the stock is placed around the Rs 685–Rs 680 zone. A breach below this level could trigger fresh weakness. As long as the stock trades below the Rs 765–770 zone, the overall trend is likely to remain bearish.

Tightness in the demand-supply situation has led to a firming of sugar prices, which augurs well for sugar mills. Sugar millers are likely to benefit from the recent surge in sugar prices, as they are holding inventory at significantly lower costs of around Rs 37/kg, compared with current ex-factory realisations of Rs 54–55/kg in Uttar Pradesh and Rs 46/kg in Maharashtra. The rise in sugar prices should help mitigate margin pressure in the ethanol division, where prices have remained unchanged for the past three years.

However, the government has permitted limited duty-free imports of 1 million tonnes of raw sugar to ease the recent rise in sugar prices. Investors should therefore remain mindful that any further government intervention could lead to a correction in sugar prices.

From a trading perspective, investors should maintain appropriate stop-loss levels and adhere to disciplined risk management.

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5.) For traders looking beyond the index, which 4-5 stocks are looking good on charts for the coming week?

Technically, Glenmark Pharma, Ramkrishna Forgings, Tech Mahindra, Uno Minda, ELGI Equipment and LTM are looking good.