Nifty 50 Technical Outlook: Analysts see more upside, suggest ’buy on dips’ strategy

Stock Market Outlook: Indian benchmark indices continued their recovery on Wednesday, November 27, buoyed by favourable political and geopolitical developments. The Sensex climbed 507 points during intra-day trading, reaching a high of 80,511.15, while the Nifty 50 surged over 160 points to touch 24,354.55. This momentum follows a 1.3 per cent gain on November 25 and a 2.4 per cent rise on November 22, indicating a potential shift in market sentiment after a period of prolonged correction.

The landslide victory of the BJP-led NDA alliance in Maharashtra state elections provided a major boost to investor confidence. Additionally, reports of a ceasefire in the Middle East contributed to the overall positive market sentiment.

The recent rally has turned the Nifty 50 positive for November, with the index up 0.5 per cent after recovering from a 3.5 per cent decline as of November 21. In October, Nifty 50 crashed 6 per cent. Despite the recent volatility, the index remains up around 12 per cent year-to-date. 

Experts remain cautiously optimistic about the market outlook, expecting some upside going ahead based on technical analysis. The immediate challenge lies in overcoming key resistance levels, they said, while advising a balanced approach, with a focus towards fundamentally strong stocks.

Technical Analysis for Nifty 50

Sameet Chavan, Head Research, Technical and Derivative, Angel One noted that the Nifty 50 is facing resistance near the critical 24,400–24,500 zone, which aligns with the 50 and 89-day exponential moving averages (DEMA) and the 38.2 per cent Fibonacci retracement of the recent decline from all-time highs.

“Surpassing this hurdle is essential for a meaningful extension of the current uptrend. On the downside, the bullish gap around 24,000–23,900 serves as a key support zone. A breach of this level could negate the recent recovery and resume the downward trend toward recent lows,” Chavan said. 

He advised traders to closely monitor these levels as the monthly expiry approaches and adjust their strategies accordingly.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities believes the market is finding support near the lower end of the current range.  "A 'Buy on Dip' strategy could be effective, allowing investors to enter long positions during market corrections,” Sheth suggested.

Meanwhile, Jigar S. Patel, Senior Manager – Technical Research, Anand Rathi Shares and Stock Brokers said the bullish divergence between price action and momentum indicators suggests a potential reversal in favour of buyers.

"Additionally, Nifty has recently broken out of a falling channel pattern, a bullish signal that often precedes extended uptrends,” Patel said. He emphasised the importance of the 23,263 level, which coincides with the Nifty’s June 2024 breakout point and the 200-day DEMA, a critical indicator for assessing long-term trends.

He added that similar technical patterns across multiple indices indicate the possibility of a broader market recovery. “The focus should now shift toward quality stocks that have been significantly beaten down during recent corrections, as they present attractive opportunities for investors looking to capitalise on the anticipated market recovery.”

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 taking any investment decisions.