Speaking to ET Now, Srivastava said that although the Nifty’s movement appears fragile at first glance, there is a slow but steady improvement beneath the surface. “It is unfortunate that we see this kind of Nifty behaviour from the bottom that we saw in early December. Every time there is a two-to-three-day rally, it is sort of given back a lot of the gains over the next four to five days,” he noted. However, he highlighted a key positive trend: the formation of successive higher bottoms.
From early December through mid and end-December, the index has consistently held above its previous lows, suggesting that downside pressure is gradually weakening. “The good news is that we have made a higher bottom each time,” Srivastava said, adding that he expects a similar pattern to play out again. In the near term, he sees strong support around current levels, with the final support zone near the 20-day moving average at roughly 26,037 on the Nifty.
On the upside, Srivastava pointed to the trend line connecting recent highs, which comes in around the 26,540 mark. “That will be the big breakout point where the up move probably accelerates,” he said. Reaching that level, however, may not be easy in the immediate term. According to him, heavy sectoral rotation is preventing the indices from making a sharp, runaway move.
He explained that leadership within the market is constantly shifting. A month ago, Reliance Industries appeared to be the standout performer, but as it has cooled off, strength has rotated into other pockets such as metals and banking. This churn, while capping index-level momentum, is also a sign of a healthier, more broad-based market. “This is a slowly upward-building market and we are seeing that trend develop across the board, one sector at a time,” Srivastava said.
When asked about sectors he is bullish on going forward, Srivastava highlighted banking as a clear standout. He pointed out that Bank Nifty has been consolidating over the last few sessions and has declined much less than the broader market. “It is sort of building a base close to 59,800,” he observed, adding that interest rate-sensitive sectors could continue to outperform.
Along with banking, Srivastava remains constructive on metals and autos, and is also seeing early signs of momentum returning to real estate stocks. He cited DLF as a recent recommendation to clients, describing it as a stock that is just beginning to participate in the broader move.Within banking, however, his preference is selective. Rather than chasing the heavyweight names such as HDFC Bank and Kotak Mahindra Bank, he sees stronger momentum emerging in second-line private lenders. Stocks like RBL Bank, IDFC First Bank and IndusInd Bank are showing better relative strength, in his view, compared to the larger, more widely owned names.
Overall, Srivastava’s assessment suggests that while headline indices may remain range-bound in the near term, the market is quietly laying the groundwork for a more sustainable uptrend, driven by rotation and selective sectoral strength rather than broad-based exuberance.
