Technical View: Bullish momentum signals Nifty targeting 26,000 despite soaring VIX; Bank Nifty hits record close in pre-Diwali session

Nifty Outlook for October 20

The early Diwali celebration with fireworks continued in the equity markets for the third consecutive session on October 17, as the Nifty 50 surpassed its June swing high and hit a fresh 52-week high. The index closed above 25,700 for the first time since October 1, 2024, igniting strong confidence among market participants.

As long as the index sustains above 25,700, it may close the long bearish gap of October 3, 2024, and set the stage for an upmove toward 26,000 and then 26,277 (record high). Support is placed at 25,500, followed by 25,400, which was earlier a strong resistance and has now turned into support, according to experts.

The continuation of the higher high–higher low structure, healthy momentum indicators, renewed FII buying interest, and increasing optimism regarding progress in India–US trade deal talks supported the market.

After an initial hour of consolidation with a slight negative bias, the Nifty 50 gained momentum as the session progressed and hit a day’s high of 25,782 in the second half. The index finished the session at 25,710, up 125 points (0.49 percent), with above-average volumes. It formed a bullish candle with minor upper and lower shadows on the daily timeframe, signaling a positive trend.

The index has decisively surpassed the crucial overhead resistance zone of 25,400–25,500 levels (down-sloping trendline as per daily/weekly charts). “The underlying trend of Nifty continues to be positive, and the market is likely to move up further in the short term,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to him, a sustainable move above 25,600–25,700 levels could pull Nifty towards the next upside target of around 26,000–26,200 levels in the near term.

For the week, the Nifty 50 surged 1.68 percent and formed a long bullish candle on the weekly timeframe, extending its uptrend for the third straight week.

Weekly derivative data suggested that the Nifty 50 is expected to remain in the 25,500–26,000 range in the upcoming sessions.

The maximum Call open interest (OI) was seen at the 26,000 strike, followed by the 25,800 and 25,900 strikes, with maximum Call writing at the 25,900, 26,000, and 26,300 strikes. On the other hand, the 25,500 strike holds the maximum Put OI, followed by the 25,300 and 25,200 strikes, with maximum Put writing at the 25,700, 25,650, and 25,750 strikes.

Bank Nifty

The Bank Nifty also continued its northward journey for the third straight session, rallying 291 points (0.51 percent) to end at a new closing high of 57,713. It formed a bullish candle on the daily charts ahead of the quarterly earnings of heavyweight constituents HDFC Bank and ICICI Bank, scheduled on October 18.

While the Nifty index still trades about 2 percent below its all-time high, Bank Nifty has already scaled a new record high of 57,830 on Friday, highlighting its clear relative outperformance against the broader market.

Technically, the index has been moving higher, hugging the upper band of the Bollinger Bands—a phenomenon typically observed during strong trending phases. This indicates persistent buying interest and suggests that dips are being swiftly absorbed by the market, a hallmark of a sustained uptrend.

For the week, the banking index gained 1.95 percent, extending its upward journey for the third consecutive week, supported by above-average volumes.

According to Sudeep Shah, Head – Technical and Derivatives Research 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 the 58,000 level, the pullback can continue further till 58,500. On the downside, the zone of 57,200–57,100 will act as a crucial support for the index,” he said.

Meanwhile, along with the rising Nifty, the India VIX, which measures expected market volatility, surged 7 percent to 11.63 and closed above the short- and medium-term moving averages. This signals bullish resilience in the market while also suggesting some caution for the bulls.

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