CLSA Sees Nifty Consolidating Before Move Toward 26,800

Nifty’s recent advance, triggered by its breakout from the 24,337–24,432 to 25,448–25,669 trading range, is now showing signs of hesitation as it approaches stiff resistance at the 2024 highs. According to Laurence Balanco of CLSA, this key resistance zone is beginning to exert pressure on the index, coinciding with a noticeable loss of upside momentum.

Balanco highlights that the market is displaying an October–November price/momentum divergence, a classic indicator that bullish momentum is waning even as price attempts to push higher. This divergence, when combined with overhead resistance, suggests that Nifty is poised for a period of consolidation rather than an immediate breakout.

He expects this consolidation to unfold within a broad range defined by:

• Support zone: 25,448–25,669

• Upper consolidation boundary: 26,250–26,277

Despite the near-term slowdown, Balanco maintains a constructive outlook. The key technical marker for preserving the bullish trend remains the 24,448–25,669 support area. As long as Nifty holds above this region, CLSA continues to anticipate an eventual break above the 2024 highs.

Should Nifty succeed in clearing resistance decisively, Balanco projects a move towards the 26,700–26,800 zone. This upside target is derived from the measured move projection of the July–October trading range, pointing to further headroom for the index once consolidation plays out.

The Nifty gained 0.61% for the week to 26,068.15, and the Sensex rose 0.79% to 85,231.92, supported by optimism around India-US trade negotiations, strong second quarter earnings, and easing inflation.

But with the rupee's volatility and critical economic data around the corner, the next few sessions will determine whether the market can defy gravity or whether the currency storm will cap the rally just short of a new high.