Technical View: Breakdown below 25,600 may deepen Nifty selling; 59,800 crucial for further upside in Bank Nifty

Nifty Outlook for January 16

• Breakdown below 25,600 may deepen Nifty selling
• 59,800 crucial for further upside in Bank Nifty
• Weekly options data suggests trading range of 25,000–26,000 for Nifty 50

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The Nifty 50 continued to show consolidation and closed one-third of a percent lower with above-average volumes on January 14, extending weakness for another session. The index remained between the 100-day EMA and 50-day EMA and also held above 25,600 on a closing basis for the fourth straight session. This suggests that a break of the 25,600–25,900 range on either side could give a firm direction to the index in the next few sessions, as the index awaits more quarterly earnings scheduled in the coming weeks.

If the index decisively breaks 25,600, 25,450 will be the immediate level to watch, followed by 25,300. However, on the higher side, 26,000–26,200 can be possible if it breaks out above 25,900, experts said.

After opening weak, the Nifty 50 showed recovery and climbed near 25,800 but could not sustain those gains in the afternoon and remained under pressure for the remaining part of the session. It finished at 25,666, down 67 points (0.26 percent), and formed a small green candle with a long upper shadow on the daily timeframe, indicating narrow-range movement in the market within the 25,900–25,600 levels along with volatility.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the underlying trend of the Nifty continues to be choppy with a weak bias. “A sustainable move only above the 25,900–26,000 levels could open more sustainable upside in the market. Any failure to sustain could result in the Nifty retesting the lows of around 25,500–25,400 levels in the next few sessions,” he said.

The weekly options data continued to suggest a broad trading range of 25,000–26,000 for the Nifty 50. The maximum Call open interest remained at the 26,000 strike, followed by the 25,800 and 26,500 strikes, with maximum Call writing at the 26,000, 26,400, and 25,800 strikes. On the Put side, the 25,000 strike held the maximum Put open interest, followed by the 25,600 and 25,500 strikes, with maximum Put writing at the 25,000, 25,600, and 25,500 strikes.

The market will remain shut on January 15 for MCGM Election day.

Bank Nifty

The Bank Nifty largely traded within the previous day’s range and closed flat with a positive bias at 59,580 amid above-average volumes, after hitting a day’s high near 59,800 (a key level for further upside) and a low near 59,300 (an immediate support). The index formed a bullish candle with an upper shadow on the daily charts, indicating a positive trend despite pressure at higher levels.

In fact, the higher high–higher low formation continued, with the banking index sustaining above the 50-day EMA and the midline of Bollinger Bands, as well as consolidating above support trendlines, which is a structurally positive setup.

On the momentum indicators front, the RSI inched slightly higher to 53.55, though it remained below the signal line, indicating a lack of strong buying momentum. The MACD also sustained below the reference line with further weakness in the histogram, while the Stochastic RSI showed a positive crossover near lower zones. All this indicates mixed momentum signals in the near term.

“The index is expected to regain momentum once it decisively reclaims the 59,800 level. Until then, the index is likely to trade in a broad range of 59,000–59,800, where 59,200–59,150 acts as a crucial support zone near the 50-day SMA, while 59,800 will continue to act as the immediate range resistance,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

Meanwhile, the India VIX, also known as the fear gauge, moved within a narrow range of 11.47–11.01 before closing higher at 11.32, up 1.09 percent. In fact, the daily range has been reducing since yesterday; hence, a sharp move on either side cannot be ruled out. Overall, it remained above key moving averages (except the 200-day EMA), which signals caution for bulls.