Emkay sees Nifty remains rangebound, midcaps stay bullish; Tata Steel & Nestle top picks

Nifty50 outlook: Emkay Global Financial Services believes that the Indian equity market continues to remain in a consolidation phase. Nifty 50 has been trading in a 500-point range (25,750–26,250) over the past 30 trading sessions, indicating lack of directional conviction.

The domestic brokerage firm said that the index remains under pressure below 26,100. Immediate support is placed at 25,750, while a deeper corrective move can extend towards the 25,500–25,300 zone. It believes that the structure for midcap stocks remains bullish but the banking barometer is losing its strength.

"Nifty Bank is trading in a sideways structure but losing relative strength compared to the broader market. The index faces stiff resistance near 59,500, and a failure to cross this level could lead to a decline towards 58,500,," it said. "The broader structure of Nifty Midcap 150 remains bullish, though it is undergoing an intermediate correction."

Emkay sees fresh bullish momentum is expected above 22,500, while 21,700 acts as a key support. On the other hand, the brokerage sees Nifty Smallcap 250 consolidating within a 16,000–16,700 range and has reacted from the upper band. A move below 16,450 could trigger further short-term weakness, it said.

The domestic brokerage firm is bullish on the FMCG sector, supported by a breach of the falling channel. On the stocks from FMCG pack, it said that heavyweights like ITC and HUL remain subdued, stocks such as Nestle, Tata Consumer, and Britannia are showing strength. On the contrary, it is bearish on the consumer durable sector.

Among the bullish counters, Emkay has picked Tata Steel Ltd and Nestle India. On the other hand, it is bearish on JSW Energy and Amber Enterprises India Ltd.

Base formation in Tata Steel is followed by breakout and successful retest suggests bullish continuation. One can accumulate in Rs 172–166 with a stop loss of Rs 160 and target price of Rs 195, it said. "Strong trend supported by 200 EMA and minor trendline breakout in Nestle India Ltd. One can accumulate in Rs 1,280–1,250 zones with a target price of Rs 1,370 and stop loss of Rs 1,230."

Breakdown of long and short-term trendlines in JSW Energy Ltd and it is trading below 200 EMA indicates bearish continuation, said Emkay with a suggestion to short the stock between Rs 470-475 with a stop loss of Rs 485 and a target price of Rs 440. "Weak sectoral setup in Amber with trendline breakdowns suggests further downside," adds, suggesting a short between Rs 6,500–6,670 with a stop loss of Rs 6,850 with a target price of Rs 5,800.