Indian equities entered October on a weak technical footing, with both the benchmarks Nifty 50 and Sensex extending their declines.
According to Axis Direct’s weekly technical outlook, the Nifty has now formed a lower-low, lower-high pattern for eight consecutive weeks, marking its longest such streak since 2001. The brokerage said momentum indicators also point to continued weakness, although select stocks are showing stronger technical structures and could offer upside over the next three to four weeks.
The BSE Sensex declined nearly 4,320 points, or around 5.6–5.8%, during September. The NSE Nifty 50 also dropped around 1,364–1,450 points, or 5.7–6.1%.
Elevated US Treasury yields and a stronger US dollar have weighed on Indian markets. Meanwhile, continued FII selling, weak rupee, high crude oil prices, escalating tensions between US and Iran also added to the weak sentiment.
Nifty 50 outlook: 22,200 crucial support
The Nifty 50 ended the week at 22,422, down around 718 points, after opening on a slightly negative note and witnessing sustained selling through the week. The weekly RSI has also been moving towards the oversold zone, signalling increasing bearish momentum.
“Technically, immediate support lies at 22,200. A decisive breakdown below this level would be a major red flag, potentially dragging the index lower toward 21,800. On the upside, immediate resistance is positioned at 22,800. A sustained breakout above this mark could propel the index higher toward 23,300,” it stated.
The brokerage added that overall, the index seems to be heading lower, the price action around the 22,200 mark will be crucial to watch as a break below this will trigger major red flags and could push the index lower.
“We also expect the gains in the index to be capped as long as we do not see a sustained move above the 23,300 zone,” Axis said.
Stocks to buy
Galaxy Surfactants | Buy Range: 2300-2254 | Stop loss: 2080 | Upside: 17% – 21% | Holding Period: 3–4 weeks
Galaxy Surfactants emerged as one of Axis Direct’s technical picks, with the brokerage setting a buy range of ₹2,300-2,254 against a current market price of ₹2,377. The technical setup indicates a potential upside of 17%-21%, with a stop loss at ₹2,080 and a suggested holding period of three to four weeks.
On the weekly chart, the stock has formed a bullish candle and appears to be moving higher after successfully retesting a breakout level. The subsequent rise has been accompanied by increasing volumes, suggesting stronger participation in the upmove.
“The stock is firmly positioned above its 20-, 50-, 100-, and 200-day SMAs, with all key moving averages trending higher in sync with price action. This confirms a strong bullish structure,” it noted.
It further noted that the weekly RSI is also moving higher, indicating improving momentum. Axis Direct sees the stock moving towards ₹2,670-2,750.
Mankind Pharma: Buy Range: 2500-2450 | Stop loss: 2365 | Upside: 9%–12% | Holding Period: 3–4 weeks
Mankind Pharma was another stock highlighted by Axis Direct, with the brokerage giving a buy range of ₹2,500-2,450 against a CMP of ₹2,535. The technical setup indicates a potential upside of 9%-12%, with a stop loss at ₹2,365. The suggested holding period is three to four weeks.
According to Axis Direct, Mankind Pharma has been forming a higher-high, higher-low pattern on the weekly chart after finding support around the 50% retracement level of its move from ₹1,900 to ₹2,638. The recovery has been accompanied by rising volumes, indicating participation in the upmove.
The stock is trading firmly above its 20-day, 50-day, 100-day and 200-day SMAs, supporting the bullish technical structure. The brokerage also noted that the daily Bollinger Bands are moving higher, signalling expanding volatility as the stock advances. Its weekly RSI is also rising, pointing to strengthening bullish momentum. Axis Direct sees potential for the stock to reach ₹2,695-2,760.
Engineers India | Buy Range: 300-290 | Stop loss: 275 | Upside: 14%–17% | Holding Period: 3–4 weeks.
Engineers India is the third technical pick in the report, with Axis Direct assigning a buy range of ₹300-290 against a CMP of ₹313. The brokerage has set a stop loss at ₹275 and sees an upside potential of 14%-17%. The suggested holding period is three to four weeks.
The stock has broken out of a rounding-bottom formation on the weekly chart, with the breakout supported by rising volumes. Axis Direct said Engineers India has also been riding the upper band of its weekly and monthly Bollinger Bands, reflecting increased momentum. The stock remains firmly above its 20-day, 50-day, 100-day and 200-day SMAs, reinforcing the bullish technical structure.
Its weekly RSI is rising as well, indicating strengthening bullish momentum across the short and medium term. Based on this setup, Axis Direct sees the stock moving towards ₹335-345.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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