The headline indices have done little to excite in recent weeks. The Nifty continues to oscillate within a defined range, lacking decisive directional conviction. Momentum has cooled, participation has narrowed in phases, and follow-through has been selective; the wider participation of breadth eludes us.

Yet, there are evident early signs that leadership is quietly rotating. Two sectors in particular, Nifty Pharma and Nifty Healthcare, are approaching structural breakout levels on the weekly timeframe. If confirmed, these moves could mark the beginning of a multi-month leadership phase.  

This is not about chasing defensives. It is about identifying emerging relative strength before it becomes consensus.

The Nifty Pharma Index peaked in the 23,600–23,900 zone in October 2024 and formed a minor double-top in December of the same year. Since then, it has been consolidating within a well-defined Ascending Triangle pattern. During this phase, the index has taken support near its 100-week moving average on two occasions. Ascending Triangles are typically bullish patterns and tend to resolve with an upward breakout.

The index is now approaching the upper boundary of this formation, placing it near a critical resistance level. The steady formation of higher lows indicates gradual absorption of supply at elevated levels. Repeated testing of resistance without significant retracement suggests that selling pressure may be diminishing, increasing the probability of an upside resolution.

Momentum and relative performance metrics further strengthen this constructive outlook. The Relative Strength Index (RSI) has broken above a horizontal resistance level ahead of the price, creating a positive divergence. Meanwhile, the Relative Strength (RS) versus the Nifty 500 Index remains in a structural uptrend that began in 2023 and has broken out following consolidation, indicating sustained relative outperformance.

A similar bullish configuration is visible in the Nifty Healthcare Index. After peaking in the 15,000–15,100 zone between October and December 2024, the index entered a consolidation phase, resulting in the formation of an Ascending Triangle pattern.

The index has recently attempted a breakout, closing marginally above the upper boundary of the triangle. While confirmation requires continued strength, any decisive move higher from current levels would validate the pattern and signal an upside resolution. The compression within the formation suggests that supply at higher levels may be gradually getting absorbed.

Momentum and relative performance indicators reinforce this constructive view. The Relative Strength Index (RSI) has broken out ahead of price, creating a positive divergence and strengthening the bullish case. At the same time, Relative Strength (RS) versus the broader market remains in a structural uptrend and has resumed its advance after a brief consolidation phase, indicating sustained relative resilience.

Takeaway