Top Stock Recommendations: Nifty Outlook for the Week Beginning September 29

According to Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities, this week’s top stock recommendations include Larsen & Toubro (L&T) and Ashok Leyland. The stock market has experienced significant volatility, particularly with the Nifty index, which saw a sharp decline of 2.65% last week. This downturn has raised concerns among investors, especially following recent announcements from U.S. President Donald Trump that have impacted the IT sector and pharmaceutical exports.

Nifty Index Performance

The Nifty index faced a notable drop last week, erasing over 60% of its gains from the previous three weeks. This decline, amounting to nearly 800 points in just seven sessions, marks the longest losing streak since March 2025, with the index closing lower for six consecutive days. The downturn reflects a growing bearish sentiment across various sectors, particularly within the IT segment, which plummeted almost 8% due to concerns over proposed changes to H-1B visa fees by President Trump. The announcement of a $100,000 fee for new applications has raised alarms for Indian IT firms, leading to significant sell-offs in major tech stocks.

Technical indicators show that the Nifty has breached several key moving averages, including the 20-day, 50-day, and 100-day EMAs, all of which are now trending downward. The daily Relative Strength Index (RSI) has also fallen below the 40 level, suggesting a continuation of the bearish momentum. Looking ahead, the critical support level for the Nifty is now positioned between 24,400 and 24,350, with a decisive break below 24,350 potentially leading to further declines towards 24,000. Conversely, immediate resistance has shifted to the 24,850 to 24,900 range.

Bank Nifty Analysis

The Bank Nifty index also experienced selling pressure last week, dropping nearly 2% and falling below the 54,400 mark. From its recent high of 55,835, the index has lost over 1,400 points in just a week, indicating a rapid correction in banking stocks. The formation of a large bearish candle on the weekly chart signals strong downward momentum and a shift in near-term sentiment.

From a technical perspective, the Bank Nifty has also broken below its 20-day, 50-day, and 100-day EMAs, which are now all pointing lower, indicating a weakening trend. The daily RSI is approaching the 40 threshold and continues to trend downward, suggesting that the index may struggle to stabilize unless market conditions improve. The 200-day EMA, situated around 53,800 to 53,700, is expected to act as a crucial support zone. A breakdown below this level could accelerate the decline towards 53,000, while immediate resistance has shifted lower to the 54,700 to 54,800 range.

Stock Recommendations: Larsen & Toubro

Larsen & Toubro (L&T) has shown promising signs of a breakout after overcoming a significant resistance zone of 3,700 to 3,710. This upward movement, supported by increasing trading volumes, indicates a potential bullish trend. L&T has closed above all key short- and long-term moving averages, reflecting a strong bullish structure. The widening of Bollinger Bands suggests robust momentum, while the RSI has moved above 60, indicating strengthening bullish sentiment.

With the ADX line rising, the trend strength appears to be improving. Investors are advised to accumulate L&T shares within the 3,730 to 3,710 range, with a stop-loss set at Rs. 3,600. The stock is expected to test the 4,000 level in the short term, making it a favorable option for investors looking for growth.

Stock Recommendations: Ashok Leyland

Ashok Leyland has demonstrated resilience, outperforming the Nifty index in recent weeks. Despite broader market weaknesses, the stock has maintained its position without succumbing to selling pressure. It continues to trade above all key moving averages, including the 20-day, 50-day, 100-day, and 200-day EMAs, indicating a strong bullish undertone.

The stock’s price action is consistently hugging the upper band of the Bollinger Bands, signaling sustained buying interest. The RSI remains comfortably above 60, suggesting healthy momentum without signs of overheating. With the ADX line also on the rise, the trend intensity appears to be strengthening. Investors are encouraged to accumulate Ashok Leyland shares in the 140 to 142 range, with a stop-loss at Rs. 137. The stock is projected to test the 151 level in the short term, making it an attractive investment opportunity.

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