Sudeep Shah Turns Cautious as Mid- and Smallcaps Lag; Picks Two Blue-Chips for Next Week

Sudeep Shah Flags Caution as Mid- and Smallcaps Lag, Names Blue-Chip Picks for Next Week

Even as headline indices trade near record levels, Sudeep Shah flags caution as mid- and smallcaps lag, signalling that the market’s recent upmove lacks the broad-based participation needed to confirm a strong bull trend. According to Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities, the rally in the Nifty may look impressive on the charts, but the coming sessions will determine whether it transforms into a genuine, sustainable trend.

Broader Market Weakness Signals Selective Rally, Says Shah

Shah highlighted that both the Midcap and Smallcap indices are in a corrective phase, and this underperformance points to a rally that lacks conviction. “The charts may be celebrating near the highs, but the broader market’s behaviour in the coming days will reveal whether this rally gains real strength, or remains a selective rise dressed up as a bull run,” he said.

The disconnect between frontline indices and the broader market has become more evident over the past week. Shah believes that unless midcaps and smallcaps stabilise and realign with the Nifty’s uptrend, the market may continue to send mixed signals. Historically, broader market participation has been a key hallmark of a durable bull phase.

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Eicher Motors and Tata Consumer Among Shah’s Stock Picks for Next Week

Among individual stocks, Shah remains optimistic about Eicher Motors and Tata Consumer Products. According to him, Eicher Motors shows strong price action supported by favourable momentum indicators, suggesting potential for further upside. Tata Consumer Products, trading above the midline of the Bollinger Bands, is displaying improving price stability and rising momentum.

“These setups indicate that both counters are well-poised for near-term gains,” Shah said, adding that traders could consider accumulation at lower levels with well-defined stop-losses.

Bank Nifty May Pause After Sharp Rally; Key Levels in Focus

While the Nifty shows selective strength, the Bank Nifty has been outperforming, scaling new all-time highs for four consecutive sessions. However, Shah noted that the momentum eased on Friday as profit-booking pulled the index below the 59,000 mark. This decline resulted in the formation of a Shooting Star pattern on the weekly chart—a classic bearish reversal signal.

He pointed to several technical indicators suggesting consolidation ahead. The RSI slipping below its 9-day EMA and a bearish divergence on the daily chart imply waning buying strength.

According to Shah, the 58,600–58,500 zone will act as an initial support. A breach below 58,500 may drag the index toward 57,700. On the upside, 59,200–59,400 remains the critical resistance. A breakout above 59,400 would negate bearish cues and re-establish positive momentum.

Rising India VIX Sparks Caution as Nifty Tests Key Support Zones

Because Sudeep Shah flags caution as mid- and smallcaps lag, he believes traders must remain vigilant about broader risk signals. The sharp spike in India VIX underscores heightened uncertainty, raising the possibility of a short-term correction toward the 25,850–25,750 zone before the Nifty attempts to reclaim its upward trajectory.

Shah emphasised that a healthy bull run requires uniform market strength. Currently, leadership is concentrated in select large-caps, while midcaps and smallcaps struggle to maintain positive momentum. “This disconnect suggests that the rally hasn’t earned full conviction,” he observed.

In the short term, as long as the Nifty holds above 25,850, the index remains poised for retests of 26,300 and 26,500. The next few sessions will be pivotal in determining whether the broader market realigns with the Nifty’s gains.

Max Healthcare Shows Strong Technical Structure; Shah Remains Bullish

On Max Healthcare Institute, Shah maintained a constructive view. The stock has twice taken support from the Rs 1,060–1,070 band since early October, a zone that coincides with the lower Bollinger Band. The RSI trending upward and trading above key moving averages reflect solid bullish structure.

A bullish MACD crossover and a rising ADX indicate strengthening trend intensity. With multiple indicators aligning, Shah expects Max Healthcare to extend its upward move.

Infosys and Nifty IT Enter Improvement Phase, Says Shah

Shah believes Infosys is nearing a crucial breakout above its 200-day EMA as it continues forming higher highs and higher lows. An upward-sloping MACD indicates strengthening momentum, and a close above the 200-day EMA could trigger a fresh rally.

The Nifty IT index, too, has closed above its 200-day EMA for the first time since July. With RSI above 60 and MACD in positive territory, Shah expects the index to gain traction if it delivers a strong follow-through session.

Federal Bank Breakout Signals Strength; Consolidation Likely Temporary

Federal Bank, which gained nearly 4%, recently broke out of a narrow range backed by strong volumes. The stock’s sideways move post-breakout indicates healthy consolidation. Shah expects the positive structure to hold as long as the stock stays above the Rs 239–232 breakout band. A sustained move above Rs 250 could spark the next leg of upside.

• Nifty 50
• Bank Nifty
• Sensex