The Indian stock market recently hit new highs, sparking excitement among investors. But according to Vinay Rajani, senior technical and derivative analyst at HDFC Securities, the momentum that typically fuels such advances is noticeably missing, signaling a cautious environment ahead.

On Tuesday, the Nifty index briefly surged to an all-time high but then slipped below key support levels, reflecting underlying weakness beneath the surface. This pullback suggests that while the bullish trend technically remains intact, the strength behind it is not robust enough to sustain a strong uptrend.

Rajani pointed out that the sluggish momentum is particularly evident in midcap and smallcap stocks, which have not kept pace with large-cap indices. This divergence is significant because mid and small caps often act as lead indicators of broader market health. Their lack of performance implies investors are reserving judgment and cautiously weighing risks.

The benchmark Nifty 50 index has been charting higher tops and bottoms consistently, indicating a general bullish pattern, but the absence of convincing follow-through volumes and enthusiasm tempers the optimism. Bank Nifty, in particular, has been stand-out performer, pushing higher and outperforming other sectors, which may provide some near-term support.

One key resistance level to watch, as noted by Rajani, is around 26,100 on the Nifty. While the index has tested this range, breaking decisively through it with sustained momentum will be critical for establishing a stronger uptrend. Until then, investors are likely to face a bumpy ride with volatility and mixed signals.

Global cues also continue to influence market sentiment, as investors stay alert to geopolitical developments, changes in monetary policy, and economic data. The Reserve Bank of India’s anticipated rate cut of 25 basis points adds an additional layer of complexity—while it may boost sentiment, the full impact remains to be seen.

For traders and investors, the message is clear: despite new highs on paper, caution should prevail. The market’s underlying momentum doesn’t fully support a robust rally, and selective stock picking with a focus on fundamentally strong sectors might be the safer strategy until clearer trends emerge.

In summary, while the headline numbers and indexes suggest a market on the rise, the nuanced view through technical analysis reveals a market still seeking direction. Vinay Rajani’s insights underscore the importance of watching beyond the surface gains and preparing for potential volatility as the market digests these conflicting signals.