Technical View: Bears can drive Nifty toward 25,500 if Friday's low gets broken next week, Bank Nifty defends 57,600

Nifty Outlook for October 27

The Nifty 50 snapped its six-day winning streak on profit booking, losing 0.4 percent on October 24 and shedding 1.16 percent from the weekly high of 26,104. The index still maintained a higher high–higher low structure, but momentum indicators signal some caution. Hence, if the index decisively breaks 25,700 (which is close to Friday's low of 25,718 and the June swing high of 25,669), the next support is placed at 25,500. Falling below this level could strengthen bearish sentiment. On the higher side, 25,900–26,000 remains the crucial resistance zone for any further upward movement, according to experts.

The Nifty 50 opened moderately higher, above 25,900, but could not sustain those levels for long. It corrected as the day progressed and finally closed at 25,795, down 96 points, forming a bearish candle with a minor lower shadow on the daily timeframe. This market action indicates a downward correction after the recent stellar upmove.

The RSI, which was at 67.92, declined, while the Stochastic RSI showed a negative crossover. The MACD sustained its bullish crossover, and the histogram remained above the zero line, though its positive momentum faded slightly.

On the weekly chart, the Nifty formed a small negative candle with a long upper shadow, signaling consolidation and selling pressure at higher levels. However, it defended the previous week’s high as well as closing levels, ending the week 0.33 percent higher.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the overall near-term trend of the Nifty remains positive, but the market is witnessing selling pressure in the short term.

“Further weakness from here could bring crucial support around 25,600–25,500 levels, which could be a buy-on-dips opportunity for the next week. Immediate resistance is placed at 25,950,” he said.

The weekly options data suggests that the Nifty may trade in the 25,500–26,000 range in the short term, with a broader range between 25,000–26,500.

The maximum Call open interest (OI) was seen at the 26,500 strike, followed by the 26,000 and 26,100 strikes, with the maximum Call writing at 26,000, 25,900, and 25,800 strikes. On the Put side, the 25,500 strike holds the maximum Put open interest, followed by 25,000 and 25,700 strikes, with the maximum Put writing observed at 25,700, 25,500, and 25,750 strikes.

The Bank Nifty also witnessed selling pressure, falling 378 points (0.65 percent) to close at 57,700, forming a long bearish candle with a minor lower shadow on the daily charts. This indicates profit booking after a recent strong rally. The index defended the July swing high (57,628) on a closing basis; however, falling decisively below this level could bring bears into action.

From an indicator perspective, the RSI, which was in the overbought zone at 76.64, has cooled off to 68.69, suggesting a pause in the ongoing uptrend. However, the MACD line remains above the signal line and the zero line, indicating that the broader bullish structure remains intact despite short-term weakness.

For the week, the banking index formed a small bearish candle with a long upper shadow and a minor lower shadow on the weekly timeframe, signaling pressure at higher levels, and closed slightly below the previous week's closing level.

According to Sudeep Shah, Head – Technical Research and Derivatives at SBI Securities, the 57,900–58,000 zone will act as an immediate resistance for the index. If the index manages to give a follow-through move above 58,000, the pullback can continue further till the 58,500 level.”

On the downside, the zone of 57,200–57,100 will act as crucial support for the index, he added.

Meanwhile, the India VIX, which measures expected market volatility, fell 1.21 percent to 11.59. It remains favourable for bulls, but a decisive move above the 13 zone could signal caution for bullish traders.