The Nifty 50 witnessed consolidation after a couple of days of a sharp rally, closing flat with a positive bias and sustaining its uptrend for the third consecutive session on December 23. Despite the consolidation, bulls continued to maintain the upper hand, with the index forming a higher high–higher low structure for the third straight day, while holding well above all key moving averages and inching toward the upper Bollinger Bands. The fall in India VIX to a new closing low also provided comfort to bulls.
Short-term moving averages maintained an upward trend with a positive bias in momentum indicators. The RSI rose to 58.7 and remained above the reference line, while the Stochastic RSI continued its upward journey with a bullish crossover. The MACD also turned bullish on Tuesday, with the histogram moving above the zero line. All these indicators signal a positive trend ahead.
The Nifty 50 opened above 26,200 and corrected sharply to test an intraday low of 26,119, but immediately recouped losses within the initial hour itself. The index remained range-bound for the rest of the session and finished at 26,177, up 5 points, forming a small bearish candle with minor upper and lower shadows on the daily charts.
Technically, this market action indicates the formation of a breather-type pattern after the recent sharp upmove. This action could be an uptrend continuation pattern, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
According to him, the underlying trend of the Nifty remains positive. “The market is expected to resume its uptrend after one or two sessions of consolidation or range-bound movement. Immediate support is placed at 26,050. The next upside levels to watch are around 26,300–26,400,” he said.
The monthly options data also suggested that 26,200 is expected to act as an immediate resistance, followed by 26,600, with immediate key support at 26,000.
The 27,000 strike holds the maximum Call open interest, followed by the 26,200 and 26,000 strikes, with the maximum Call writing seen at the 26,200, 26,600, and 26,700 strikes. Meanwhile, the maximum Put open interest was observed at the 26,000 strike, followed by the 26,200 and 25,500 strikes, with the maximum Put writing at the 26,200, 25,700, and 25,800 strikes.
Bank Nifty
The Bank Nifty snapped its two-day winning streak and closed a volatile session flat with a negative bias, falling 4.5 points to 59,300 and closing marginally below the midline of the Bollinger Bands (59,320), which is crucial for further upside toward the 59,800–60,000 levels.
The index formed a small bearish candle with slightly long upper and lower shadows, resembling a high-wave type pattern on the daily charts, indicating volatility and indecisiveness after the recent upward journey. The index continued to form higher highs and higher lows for the third straight session, while holding above all key moving averages.
“The zone of 59,500–59,600 will act as a crucial hurdle for the index. Any sustainable move above 59,600 will lead to a sharp upside rally up to 60,000, followed by the 60,500 level in the short term,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
On the downside, the zone of 59,100–59,000 will act as important support for the index, he added.
Meanwhile, the India VIX hit a fresh record closing low of 9.38, down 3.07 percent, offering reassurance to the prevailing bullish sentiment. So far this month, the VIX has fallen 19.28 percent.
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