Can Nifty break records this week? Here’s what the charts say

After a six-day winning run, the Nifty paused for breath on Friday. In an interview with ETMarkets, Anand James, Chief Market Strategist at Geojit Investments, decodes the charts, derivatives setup, and key triggers that could determine if the Nifty is ready to break past its record high in the week ahead.

Edited excerpts:

Nifty broke its 6-day winning streak on Friday but the market started showing signs of some weakness on Thursday afternoon itself. Do you think all-time record high looks possible in the week ahead?
Over the past decade, Nifty50 has delivered negative returns during the Diwali week in 5 out of 10 instances. Interestingly, in 80% of those cases, the index went on to decline by an average of 2% in the following month. If history were to repeat itself, Nifty50 could potentially drift towards the 25,400 mark in the near term, before returning to the upside trajectory. Adding to the cautious sentiment, banking stocks, which constitute around 20% of the Nifty50, appear vulnerable and may contribute to the ongoing pullback.

However, Oil & Gas stocks, particularly Reliance Industries, are showing resilience and could help limit deeper corrections or even hasten the return to the upside trajectory sooner.

The Diwali rally appeared largely driven by short covering. How much room remains for further unwinding in the system?
The decline in OI during the last week of expiry, typically a period of unwinding, was just 9%, significantly lower than the six-month average of 20%. This hints at further room for unwinding in the coming week.

Meanwhile, FIIs’ shortcovering of their index future shorts have picked up pace. The long short ratio has pushed above 20, long’s open interest has risen to 50k levels, both occurring for the first time since July 2025. However, FIIs hold a trifle more shorts than those held during the June-mid July period, during which Nifty was in the 25000 vicinity, in comparison to the 26000 vicinity now. That FII’s short covering is unfolding even at such a higher level, points to potential for continuation of the short covering.

IT was the surprise gainer in the holiday-shortened week. What are the charts indicating at - profit booking or more upside?
The Shooting Star pattern formed on Thursday, followed by a bearish large-bodied candle on Friday, is yet to confirm a breakdown. Instead, it may be interpreted as bearish hesitation, suggesting that while some further pullback could occur early next week, a decisive trend reversal is still uncertain.

On the weekly charts, the broader trend remains positive, with the MACD histogram printing another green bar, reinforcing the potential for an upward move towards 37,600 in the near term.

From a derivatives perspective, around 70% of stocks on Friday, and 60% on a week-on-week basis, witnessed long unwinding, indicating ongoing profit booking. However, it's worth noting that 20% of IT stocks recorded an OI PCR below 0.5, hinting at a possible support build-up in the sector.

From a stock-specific angle, major IT names like TCS, Infosys, HCLTech, Wipro, Tech Mahindra, and LTIM may face further profit booking in the short term. Nevertheless, we anticipate that bulls could regroup soon, potentially driving the index higher toward the 37,600 mark.

SCI shares went up 22% in the last one week on the back of government's Rs 70,000 maritime package announcement. How would you trade the stock going ahead?
While the Rs 270 vicinity appears to be the first pause point for the ongoing breakout move, we see potential for even larger strides, ideally aiming for Rs 330-340. Fresh entry would be tricky though, as the tightly wound stochastics could spark volatility, but a downside marker near Rs 260 could be used by aggressive traders who would want to enter right away, for fear of missing out.

Give us your top ideas for the week.

POLICYBZR (CMP:1682)

View: Buy

Target: Rs 1760

SL: Rs 1644

The stock has been under pressure since September, consistently forming lower lows. This week, however, it rebounded from the lower trendline support near 1633, indicating that a pullback may be underway.

On the technical front, the MACD is nearing a bullish crossover on the daily chart, while the weekly MACD histogram shows signs of exhaustion at lower levels, both suggesting a potential recovery attempt.

We anticipate the stock could move towards 1730 and 1760 in the near term. To manage risk, long positions should be protected with a stop-loss placed below 1644.

PFOCUS (CMP:178)

View: Buy

Target: Rs 190

SL: Rs 168

The stock has been trading within a rising trend channel since July, and this week it rebounded from the trendline support near 164. It has also broken above the narrow resistance zone around 172, formed during October, indicating short-term bullish momentum.

From a technical standpoint, the MACD has crossed above the signal line, and the 14-day RSI has moved above its moving average, both of which reinforce the expectation of an uptrend. Based on current momentum, we anticipate a potential move towards 190 and 200 in the near term.

To manage risk, long positions may be protected with a stop-loss placed below 168.