Nifty Eyes 24,600 Target While IT Sector Faces Continued Pressure

The Nifty 50 has successfully breached the psychological 24,000 mark, driven by favorable geopolitical developments and a strengthening technical structure. However, while the broader market index shows signs of a recovery rally, the IT sector remains a significant drag on overall market momentum.

Nifty Outlook: Targets and Support Levels

According to Akshay Bhagwat, Associate Director of Derivatives Research at JM Financial Services, the Nifty's technical structure remains robust. The current recovery trajectory suggests a positional target of 24,600, a level previously achieved during the highs seen in April.

While the index has crossed the 24,000 threshold, investors should be mindful of a minor resistance zone near 24,100, where market choppiness is expected. On the downside, the broader support for the June series is established around 23,800. Bhagwat suggests that any short-term dips toward these levels should be viewed as buying opportunities rather than signs of a trend reversal, given the strength of the larger upward movement.

IT Sector: A Sectoral Drag on Markets

In stark contrast to the broader market's optimism, the Nifty IT index is struggling to find its footing. The sector has emerged as a major laggard, with large-cap names facing sharp selling pressure. Currently, the IT index is attempting to hold the critical 27,500 support level.

The technical pattern for IT stocks remains challenging; every attempt at a recovery has been met with renewed selling. Bhagwat maintains a neutral-to-bearish stance on the sector, noting that it is still searching for a definitive bottom. For traders managing positions in the June series, the recommendation is to "sell into rallies" rather than attempting to "buy the dips" until the sector stabilizes.

Technical Trade Ideas: BEL and TVS Motors

For investors looking for specific opportunities within the current market structure, two stocks have stood out on the charts:

  • Bharat Electronics (BEL): As a defensive-sector play, BEL has demonstrated a strong recovery over recent sessions. Trading around the 429 mark, the stock shows potential upside targets of 450 and 462. To manage downside risk, a stop-loss at 403 is suggested.
  • TVS Motors: After establishing firm short-term support around the 3,300 level, TVS Motors appears poised for a breakout. If the stock clears the 3,500 resistance, it could target a range of 3,650–3,700. A stop-loss at 3,300 is recommended to protect against volatility.

Key Takeaways

  • Nifty Momentum: The broader index maintains a bullish trend with a target of 24,600, supported by a strong base at 23,800.
  • IT Sector Caution: Nifty IT remains a weak link; traders are advised to avoid chasing rallies in this sector as it seeks a bottom near 27,500.
  • Selective Opportunities: While the macro view is cautious, specific stocks like BEL and TVS Motors offer technical setups for disciplined traders using defined stop-losses.