Nifty Stagnates While Broader Market Thrives: Vinay Rajani Unravels the Real Story Behind the Divergence

India’s benchmark Nifty 50 index has remained range-bound between 23,300 and 23,400, despite significant rallies in global markets driven by dovish indications from former President Donald Trump. According to Vinay Rajani, AVP and Senior Technical & Derivative Analyst at HDFC Securities, this stagnation in the Nifty masks a more vibrant and bullish broader market scenario. While the Nifty appears to be underperforming, indexes such as the Nifty Midcap 100 and Microcap 250 have reached all-time highs, demonstrating a robust underlying market sentiment that is being overlooked by investors focused solely on large-cap stocks.

Rajani attributes the Nifty’s sluggish performance primarily to the lack of foreign institutional investment (FII) in large-cap stocks. He believes that the absence of this critical buying force has led the Nifty to lag behind the broader market, which is experiencing genuine bullish momentum. The recent technical breakthrough, where the Nifty broke out of a seven-session consolidation, presents a more optimistic outlook, with a target of 24,740 to 24,750 based on the 200-day moving average. This upward potential is supported by a strong downside floor at 24,000, suggesting that the Nifty could begin its catch-up rally alongside global markets.

In terms of actionable trading strategies, Rajani recommends focusing on selective opportunities within the large-cap space. His immediate picks include Ashok Leyland and Tata Steel, both of which have shown signs of renewed technical strength. For Ashok Leyland, he suggests a long position between ₹168.50 and ₹169, targeting ₹177 over the coming few sessions. In the metals sector, Tata Steel presents a favorable risk-reward ratio, with a buy recommendation around ₹217, a target of ₹225, and a stop loss at ₹213. Overall, Rajani conveys a message of selective optimism, emphasizing that the internal breadth of the market remains strong and that investors should pay close attention to the broader market dynamics that may provide valuable insights beyond just the Nifty index.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)