Nifty’s comeback or a largecap trap? Anand James decodes breadth, IT and Swiggy

Overall, the evidence does not yet support a genuine broad-market recovery.

Anand James, Chief Market Strategist at Geojit Investments, says the recovery still looks like a narrow largecap-led bounce, even as the 18% surge in Nifty IT points to the early stages of a possible leadership cycle. He also assesses Swiggy’s rebound prospects and names his top stock ideas for the week.

Edited excerpts from a chat:

Nifty gained 2% in October, but the Nifty 500, midcaps and smallcaps have remained under pressure. Is this a genuine market recovery or merely a narrow largecap-led bounce?

The data suggests that October’s gains in the Nifty are still better characterised as a narrow large-cap-led recovery rather than a genuine broad-market revival. While broader-market breadth improved sharply from the lows seen around October 23, the latest readings show that this improvement has failed to sustain.

Short-term participation initially showed encouraging signs. Between October 23 and October 29, the proportion of stocks above their 10-DMA increased from 10.8% to 45.8% in the Nifty 500, 8.7% to 45.3% in the Midcap 150 and 7.6% to 40% in the Smallcap 250. However, the latest readings have slipped sharply to 36.4%, 34% and 28.4%, respectively. None managed to cross the 50% threshold, suggesting that the recent breadth expansion lacked follow-through.

The weakness is more evident on the 20-day timeframe. Only 27.8% of Nifty 500, 27.3% of Midcap 150 and 18.8% of Smallcap 250 constituents are currently above their 20-DMAs. Smallcaps are particularly weak, with more than four-fifths of constituents trading below their 20-day average. This indicates that the short-term rebound has not translated into a broader improvement in trend.

Overall, the evidence does not yet support a genuine broad-market recovery. The rebound briefly began spreading beyond large caps, but the subsequent deterioration in 10- and 20-DMA breadth indicates that this broadening has stalled. With fewer than 40% of stocks above their 10-DMAs, fewer than 30% above their 20-DMAs in two of the three indices, headline Nifty strength continues to run well ahead of the underlying market. For now, the October move remains predominantly a large-cap-led bounce, with midcaps showing relative strength while smallcaps are yet to demonstrate sustained participation.

The Nifty IT index jumped about 18% in October, sharply outperforming the broader market. Is this the start of a durable leadership cycle or an oversold technical rebound?

The recent move in Nifty IT increasingly looks like more than an oversold technical rebound, with improving price structure, strength across key constituents and supportive derivatives positioning pointing towards the early stages of a potential leadership cycle.

The recovery has been led by Infosys, Coforge, Persistent Systems and Wipro, which continue to show strength and appear capable of supporting further upside. More importantly, Nifty IT has broken above a key horizontal resistance on the weekly chart with a strong bullish candle. The index has also generated a weekly Supertrend bullish signal and closed above its 50-week moving average for the first time since December 2025, marking a significant improvement in the medium-term trend structure.

Sustaining the breakout could pave the way for a move towards the next resistance around 34,660, while 29,900 remains the key support. Holding above this support would keep the improving structure intact.

The derivatives picture is also encouraging. Around 80% of near-OTM put strikes are witnessing short buildup, while near-OTM call strikes are seeing long positions, suggesting a constructive directional bias.

Overall setup suggests that the move has the potential to evolve into a durable leadership rather than remain an oversold bounce. A sustained move towards and eventually above 34,660 would provide stronger confirmation of this emerging leadership trend.

Swiggy was one of the biggest losers in this earnings season. Do you see chances of a bounce back in the week ahead?

October’s low has been defended despite two attempts to break it. While this raises hopes that the massive and sustained selling spree is probably coming to an end, there is little else to suggest that a turnaround is underway. More price action is required for oscillators to signal a reversal. That said, the stock is nearly 13% away from its 10 day SMA, which signals bearish exhaustion and raises the odds for a mean reversion upmove next week.

Acutaas Chemicals shares shot up 28% this week. What does the chart indicate next?

A triangle breakout that shook off prices from the consolidation pattern that held the trend stifled since July, points to bullish continuation to a multi year rally. However, signals from volume and oscillators are yet to align in confirmation, warning us to be cautious. This prompts us to play uptrend only with a stop trailed to 3820 or 3735.

Give us your top ideas of the week.

SUNPHARMA (LTP: 1777)

View: Buy

Target: 1920

SL: 1720

Sun Pharma is showing early signs of a recovery after profit booking from its July record high triggered a correction of around 15%. The decline has brought the stock towards an important support cluster around 1720-1750, where the 100-week moving average and weekly Supertrend are providing support.

The formation of an inverted hammer near this zone indicates rejection of lower levels and suggests buyers are gradually returning. The latest weekly candle also shows a recovery from an intraday low near 1726, reinforcing the importance of this support area. While momentum remains subdued following the correction, the broader structure appears constructive as long as the support zone holds.

A sustained recovery from current levels could see SUNPHARMA moving towards1800-1870 region, opening the way for a move towards 1920 over the next few weeks. Keep a stoploss of 1720 for all longs.

PRICOLLTD (LTP: 644)

View: Buy

Target: 720

SL: 615

Pricol’s broader uptrend remains intact, supported by a long-standing pattern of higher highs and higher lows. After peaking in August, the stock corrected nearly 25%, bringing prices back towards the rising trendline support around 600-620. The chart shows signs of stabilization around this zone, with an attempted rebound suggesting buyers are returning at lower levels.

Momentum is also beginning to improve. The daily RSI is recovering from oversold territory, while the MACD has generated a bullish signal crossover, indicating that selling pressure is easing. The confluence of long-term trendline support and improving momentum provides a favourable setup for a rebound.

As long as 615 holds, the bullish structure remains valid, with potential for a recovery towards 720 over the next few weeks.