However, he notes that momentum oscillators have yet to confirm a full breakout, indicating that an apparent collapse is not imminent unless key support levels are decisively broken.
Edited excerpts from the conversation:
The Nifty ended the week around 1% lower as IT stocks edged lower. How do you see the market shape in the first week of March?
After persistently avoiding the downside despite several attempts throughout the month, the 200-day SMA finally gave way on the last working day of the month. This raised concerns of a retest of the February 24,571 low. However, with the first test of the lower Bollinger Band, within touching distance of the supertrend support at 25033, we are hoping for a recovery move in the second half of the week. However, a break above the 25000 area may negate the possibility of a near-term recovery. That said, the oscillators are not yet signaling a complete collapse.
In the last 3 days, Nifty IT tried to rise. Do you think it’s a dead cat bounce or a sustained rise? Is it too early to say that IT stocks are over?
Over the past few sessions, the Nifty IT bounce has looked more like a technical recovery than the start of a sustained uptrend. The index recently touched a 52-week low near 29875, and despite a slight advance, it continues to trade below key moving averages, confirming a bearish setup.
On the daily chart, the price remains below immediate resistance at 31100-31300, and only a decisive move above 33200-34400 will indicate a structural trend reversal. Until then, the rallies are vulnerable to sales. The weekly chart reinforces this weakness with the indicator breaking out of the recent H&S structure, marking a clear bearish phase.
If we look at the seasonality, the past 15 years show that March has been net negative on average for the Nifty IT Index, with a low win rate of just 40% and relatively high volatility, creating a bearish cloud over the sector. Given this background, it is high time to announce the low. For a meaningful trend reversal, the index should protect 30,000 and make a higher low and then claim and hold above 33,200-34,400.
Therefore, the recent high in Nifty IT is more likely to be a dead cat than the beginning of a new high. The sector remains in a deep correction phase with no confirmed low yet. We will wait for price to recover key resistance zones before treating any bulls as the start of a sustained reversal.
In the last 3 trading sessions, have we seen shorts in IT stocks?
Although the first two sessions of the new series witnessed short covering in most stock futures, index majors like TCS, Wipro, and Tech Mahindra lost momentum on Friday. Almost 60% of near-ITM and OTM call options strikes have seen recent short additions, indicating a high level of caution. Additionally, nearly 60% of stock futures recorded a short formation on Friday, and nearly 80% showed a weekly short addition. Overall, the derivatives landscape shows that traders are unconvinced by the recent pullback and may be clearly positioned for further downside before considering a new bullish exposure.
Metal works well. What do the charts tell you?
On the daily chart, the Nifty metal index is strengthening just below the 12450-12500 resistance zone, marked by several failed attempts to break higher. The candlestick shows tight body price action near the upper band of the previous rally, indicating that buyers are still active but facing overhead supply. The trend structure remains positive with the price holding above the short-term moving average and holding the high low. However, recent red candles and a modest rollover in the MACD histogram suggest a loss of short-term momentum, warranting caution if 12150-12200 is broken.
On the weekly chart, the index showed a strong medium-term uptrend, which was broken by an extension of the bullish candle after breaking the previous swing highs. The price continues to the green cloud zone, reflecting the strength of the healthy trend. Increased volumes in recent weeks reinforce the possibility of institutional participation.
If we look at the derivative diagram, it presents mixed signals. About 80% of metal stock futures saw short additions on Friday, while nearly 60% were long additions during the week. In addition, nearly 80% of near-OTM call option strikes witnessed short formation on Friday. Taken together, F&O traders appear to be positioned for some short-term downside
So, expect near-term weakness but a decisive weekly close above 12,500 could be the next leg up.
Tejas was the biggest gainer in the week. How do you trade stocks now?
The highs of the past two days as well as near-term resistance at 441 increase the likelihood of a break. However, we believe the stock is poised for big gains, supported by a limited range breakout as well as bullish continuation patterns, suggesting a near-term target of 522-533. Stop loss may be placed near 389 or 376.
Give us your best ideas of the week.
Paragamalk (CMP: 202)
View: Taking
Objective: 222 – 235
Stoploss – 187 The weekly chart shows the stock in a corrective phase after a sharp decline from the 360-380 region. The price has now dropped to a key support zone around 180-190, which is closely aligned with the 200 WMA, historically a long-term support area. The doji candles that formed during the week reflect a decline in bearish momentum, offering early signs of stability as buyers try to defend this level.
Despite the correction, the broad trend structure from 2023 to 2025 still reflects a series of higher highs and higher lows that maintain a long-term upward trend.
Weekly MACD histograms have shifted back in favor of buyers. A flat or upward movement in the MACD line will serve as the first confirmation of renewed strength.
Overall, the stock is positioned at an important support level that warrants a return towards 225-235, while a decisive close below the 200-week moving average may open up a possible upside towards 160.
HEG (CMP: 578)
View: Taking
Target: 625
Stoploss – 560HEG shows a medium-term sustained trend on the weekly chart, supported by sustained highs and lows since mid-2024. Price continues to trade well above the 200-WMA, indicating strong long-term structural strength. Recent candles show a strong connection between 540 and 600, suggesting that the stock is building energy for its next directional move.
The last bounce off the lower end of this range reflects active dip buying, keeping the overall bias positive until the stock is above 560-40. A decisive weekly close above 600 will confirm the continuation of the breakout, opening the way to higher targets.
Weekly MACD remains slightly positive but flat, the trigger movement is still neutral and awaits a trigger.
Overall, HEG remains in a constructive order. Holding above support and breaking past 600 with volume will reinforce the bullish trend.
