Technical View: 3-day rally emboldens Nifty bulls to target 25,600, Bank Nifty eyes record high but needs to sustain above 60k as VIX drops further

Nifty outlook for January 30

• 3-day rally emboldens Nifty bulls to target 25,600
• Bank Nifty eyes record high but needs to sustain above 60k
• India VIX drops further

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The Nifty 50 gained further strength, rising one-third of a percent as bulls maintained support for the third consecutive session on January 29. The index reclaimed its short-term moving average (10-day EMA), aided by banking stocks, as the Bank Nifty hit the psychological 60,000 mark for the first time since January 19 amid a decline in the India VIX.

Hence, if the Nifty 50 sustains above the 10-day EMA (i.e., 25,400), the next hurdle is placed at 25,600 (slightly above the 20-day and 100-day EMA). Above this level, all eyes will be on 25,700, which could bring the index back into momentum. However, the immediate crucial support to watch is the 200-day EMA at 25,160, experts said.

The Nifty 50 started its recovery after an initial hour of volatility, taking support at the 200-day EMA, and turned strong in the last couple of hours of trade. It hit an intraday high of 25,458 before closing 76 points, or 0.3 percent higher, at 25,419.

The index formed a bullish candle with a long lower shadow and a minor upper shadow on the daily charts, indicating strong buying interest at lower levels despite minor correction at higher levels. Momentum indicators showed gradual improvement, with the RSI at 43.07 and the Stochastic RSI sustaining a bullish crossover. The MACD inclined further upward, though it remained below the signal and zero lines.

According to Nilesh Jain, Head – Technical and Derivatives Research Analyst (Equity Research) at Centrum Broking, the overall structure appears constructive, with potential for a follow-up move towards the 25,500–25,600 zone.

“The immediate resistance is placed at the 100-DMA near 25,600, and a decisive breakout above this level would confirm a short-term bottom. However, ahead of the Budget, markets are expected to remain volatile within a broader range of 25,100–25,600,” he said.

Weekly options data continued to suggest that the Nifty 50 may face resistance at 26,000, with crucial support at 25,000, ahead of the Union Budget scheduled on February 1.

The maximum Call open interest was seen at the 26,000 strike, followed by the 25,500 and 25,800 strikes. Maximum Call writing was observed at the 26,000, 26,200, and 25,450 strikes. Meanwhile, the 25,000 strike held the maximum Put open interest, followed by the 25,300 and 25,200 strikes, with maximum Put writing at the 24,900, 25,400, and 25,200 strikes.

Meanwhile, the India VIX, also known as the fear index, fell further to the 13.37 zone, down 1.15 percent, signalling some comfort for bulls. However, stronger comfort is likely only after it drops decisively below the 11 level.

Bank Nifty

The Bank Nifty also maintained its upward journey for the third straight session and outperformed the benchmark Nifty 50, as it not only sustained above all key moving averages but also hit the psychological 60,000 mark and a falling resistance trendline. If the index reclaims and remains above these levels, a fresh record high in upcoming sessions cannot be ruled out.

The banking index rallied 359 points, or 0.6 percent, to 59,958 and formed a bullish candle on the daily timeframe amid robust volumes. Momentum indicators were largely aligned with the uptrend, as the RSI and Stochastic RSI sustained bullish crossovers, indicating a pickup in buying strength. The MACD is on the verge of a positive crossover, with weakness fading in the histogram.

“The overall setup reflects renewed strength in the index; however, volatility may remain elevated ahead of the Union Budget announcement,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

“Despite potential short-term swings, the undertone remains bullish. For the near term, Bank Nifty is expected to trade in a broad range, with support at 59,000 and resistance at 60,400 levels,” he added.