ICICI Securities’ Dharmesh Shah: Why Now is the Time to Buy Nifty Dips

Despite global uncertainties, technical indicators suggest Nifty has bottomed out—setting the stage for a new rally.

Market Recovery Signals a Turnaround, Says Dharmesh Shah

Dharmesh Shah, Head of Technical Research at ICICI Securities, believes that recent developments in the equity market indicate a strong base formation in the Nifty 50 index. After digesting several rounds of negative news, the index appears poised for a rebound with a potential target of 24,000 in the coming month.
“The latest recovery isn’t just a relief rally,” Shah emphasized. “It shows resilience backed by positive divergence on weekly charts, signaling that the worst may be behind us.”
He further noted that the current market setup offers a ripe opportunity for medium-term investors to start building quality portfolios, especially with Q4 earnings season getting underway.

Buy-on-Dips is the Way Forward

According to Shah, any decline toward the 22,300 zone should be embraced, not feared.
“That’s not a red flag. Instead, see it as a healthy retracement and a chance to accumulate fundamentally strong stocks,” he explained.
After President Trump announced a 90-day halt on new tariffs, markets recovered their calm, despite the initial anxiety early last week. The Nifty bounced back nearly 5 percent from the lows and eventually closed flat at 22,828.

Is the “Trump Bottom” Already in Place?

Shah believes that, technically, the markets have already hit a bottom. The Nifty’s ability to repeatedly hold the 21,900 mark—also aligned with its 100-week EMA—shows strong support.
“Over the past two decades, bull market corrections tend to average 18 percent over 8–9 months. We’ve already corrected 17 percent in the last seven months. Historically, such setups have led to 23 percent returns over the next 12 months,” he explained.

Signs Supporting the Bullish View

A number of technical and macro indicators are working in the market’s favor:
• Improving Market Breadth: While the Nifty 500 made a new low, the number of stocks trading above their 200-day moving average has improved from 7% to 15%—a classic sign of divergence.
• Dollar Weakness: At 99.50, the US Dollar Index is hovering close to a two-year low.
• Oil Stability: Brent Crude has rebounded from $58 and is currently hovering around $63 per barrel.
• Volatility Drop: The VIX (volatility index) has sharply fallen from recent highs, indicating that anxiety around tariffs may be subsiding.

Can Bank Nifty Hold the 51,000 Level?

Shah is optimistic about banking stocks, which have shown strong relative strength amid global turmoil. He expects the Bank Nifty to head toward 53,200 in the coming weeks, with the 50,000 mark acting as strong support—thanks to both the 200-day EMA and key Fibonacci levels.

Midcap Index: A Double Bottom in Progress?

Yes, says Shah. The Nifty Midcap 100 index held its March low of 46,865 and rebounded strongly last week. This has formed the right shoulder of a potential double bottom pattern near its 100-week EMA.
“A decisive close above 52,926 will confirm the breakout and open doors for a significant uptrend,” he added.

This Week’s Strategy: Stay Calm, Buy Selectively

Volatility isn’t going away just yet, with ongoing tariff developments keeping traders on their toes. Still, the broader trend appears to be in recovery mode.
“Use the volatility to your advantage,” Shah advises. “Adopt a staggered buying approach, focus on domestic growth themes, and avoid leveraged trades.”
He added that while minor pullbacks are possible, they shouldn’t deter investors. The focus should remain on accumulating stocks with solid earnings visibility and long-term growth potential.

Sectors to Watch

For the current week, Shah is keeping a close eye on:
• Banking
• Information Technology
• Metals
• Power
• Defence
• Pharmaceuticals
• Infrastructure
These sectors, he believes, are best positioned to ride the next leg of the rally.

Final Thoughts: Stay the Course, Let the Charts Lead the Way

The broader market may continue to face global headwinds, but technical signals suggest that Nifty has formed a solid base. Dharmesh Shah’s analysis offers a strategic blueprint: focus on high-quality domestic stocks, stay nimble amid volatility, and trust that the charts are pointing to higher ground.
If the market holds key support levels and earnings season delivers as expected, 24,000 on the Nifty may be closer than it seems.

The image added is for representation purposes only