Top Stock Recommendations: Nifty Outlook for the Week Beginning January 12, 2026
According to Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities, investors should keep an eye on Alkem Laboratories and MTAR Technologies as top stock picks for the week. The Nifty index experienced a significant decline last week, marking its sharpest drop since September 2025, while the Bank Nifty showed relative resilience despite closing lower. As market dynamics shift, Shah’s insights provide a crucial overview of the current trading landscape.
Nifty Index Performance
Last week began with optimism as the Nifty index reached a new all-time high on Monday. However, this enthusiasm quickly faded, leading to a sharp correction of approximately 2.5% by the end of the week. This decline is notable as it represents the steepest weekly drop since September 2025. The Nifty has shown a concerning trend, opening lower each day for the last four trading sessions, indicating persistent selling pressure. The question now arises: is this merely a healthy pullback or a sign of a more significant trend reversal?
From a technical standpoint, the Nifty has confirmed a breakdown of an Adam & Adam Double Top pattern, altering its near-term risk profile. The index has fallen below both its 20-day and 50-day exponential moving averages (EMAs), with the latter, which had previously held as support, finally giving way. Currently, the Nifty hovers near its 100-day EMA, and momentum indicators have weakened significantly. The daily Relative Strength Index (RSI) has dipped below 40 for the first time since September 2025, suggesting a potential for further downside rather than an immediate recovery. Immediate support is identified in the 25,500–25,450 range, with a break below 25,450 likely leading to a sharper decline towards 25,200.
Bank Nifty Analysis
In contrast to the broader market, the Bank Nifty managed to outperform last week, closing down nearly 1.5%. This decline is significantly less severe than the broader market corrections. However, a warning sign has emerged in the form of a Dark Cloud Cover candlestick pattern, indicating a potential shift in market sentiment from bullish to bearish. The Bank Nifty has also slipped below its 20-day EMA, signaling short-term weakness.
The technical indicators for the Bank Nifty are showing signs of waning momentum. The daily RSI has crossed below its 9-day average, and both lines are trending downward, suggesting a decrease in buying interest. Additionally, the fast stochastic has fallen below the slow stochastic line, reinforcing the notion that upside momentum may be limited in the near term. Key support is identified in the 58,700–58,600 zone, and a sustained break below this level could lead to increased selling pressure, potentially dragging the index down to 58,000 and then 57,500.
Stock Recommendations: Alkem Laboratories and MTAR Technologies
Sudeep Shah recommends Alkem Laboratories as a strong buy, noting that the stock has confirmed a breakout from a downward-sloping trendline. This breakout was followed by a robust price movement, indicating a positive shift in its price structure. The RSI has shown a significant rebound, rising from 37 to 63, reflecting a recovery in bullish momentum. The Average Directional Index (ADX) is also rising, suggesting that the new uptrend is gaining strength. Investors are advised to accumulate Alkem shares in the range of 5,800-5,790, with a stop loss set at 5,620. The stock is expected to test the 6,200 level in the short term.
MTAR Technologies is another stock to watch, having consistently found support at its 50-day EMA. The stock recently surpassed its previous swing high of 2,719 and experienced a nearly 7% rally, backed by increased trading volumes. The RSI is on an upward trajectory, indicating strengthening bullish momentum. Investors are encouraged to accumulate MTAR shares in the range of 2,690-2,680, with a stop loss at 2,605. The stock is anticipated to reach 2,875 in the near term.
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