Reliance's breakout signals hope for bulls, but Jai Bala has one key Nifty level to watch

Reliance Industries is showing signs of a potential trend reversal, but investors may need to wait for further confirmation before turning decisively bullish on the broader market, according to market analyst Jai Bala of Cashthechaos.com.

Speaking to CNBC-TV18, Bala said Reliance's move above the ₹1,249 level was a welcome development for the bulls, adding that a close above ₹1,275 would be particularly significant. The stock has been one of the key pivots that the market has been waiting for, he said.

However, Bala cautioned that the broader market's recovery was not yet confirmed, with the Nifty facing a crucial resistance level at 23,750.

He said the Nifty's rise from its October 8 low to its October 19 high could either signal a trend reversal or simply represent a corrective rally. A decisive move above 23,750 would strengthen the bullish case and potentially open the door to fresh record highs.

"Stalling at 23,750 and reversing will not be a good sign. We want the Nifty to just bludgeon through the resistance at 23,750," Bala said.

He added that several macroeconomic and domestic indicators were turning favourable for Indian equities. Falling US 10-year bond yields and expectations of softer crude oil prices could provide further support to the market.

Bala identified four key segments that have been weighing on the Indian market: Reliance Industries

, HDFC Bank, FMCG and IT. While Reliance and IT are now showing signs of a reversal, the recent movement in crude oil prices could provide another positive signal for equities.

Despite these encouraging developments, Bala said he would prefer to wait for additional confirmation before taking fresh directional positions in the market.

For investors looking to position themselves for the next leg of the rally, he identified capital goods and real estate as sectors that could outperform.

"If you want to switch, you should be in the capital goods and real estate spaces. Those are the sectors likely to power ahead in the next leg of the move," he said.

Bala also advised investors to maintain hedges if they choose to take long positions before the Nifty decisively crosses 23,750.

"I know it's better to be out of the market and regret it rather than be in the market and regret it," he said.