Technical View: Bulls may push Nifty towards 26,500 in October series, trend remains positive despite consolidation

Nifty Trend

The Nifty 50 saw consolidation and snapped a six-day winning streak after a consistent record-high run, closing the first session of the October series with moderate losses on September 27. However, the weekly gains remained strong, with the index recording a new closing high. Despite this consolidation, the trend remains favourable for bulls, with the VIX at a fresh two-month low. According to experts, the index is likely to climb towards 26,500 in the coming days, as long as it holds 26,000 as support on a closing basis. However, if it falls below 26,000, the sentiment may shift slightly.

The Nifty 50 opened higher and hit a new intraday all-time high of 26,277 but turned volatile in the second half, losing all the morning gains and ending 37 points lower at 26,179. A small bearish candlestick pattern appeared on the daily charts.

For the week, the index rallied 1.5 percent, forming a bullish candlestick pattern for the third consecutive week with above-average volumes. Momentum indicators, including the RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence), maintained a positive bias.

Amol Athawale, VP-Technical Research at Kotak Securities, views the current market texture as bullish, but suggests that buying on dips and selling on rallies would be the ideal strategy for short-term traders.

For traders, according to Athawale, 26,100 and 26,000 would act as key support zones, while 26,400-26,500 would serve as crucial resistance areas for the bulls. However, if the index falls below 26,000, sentiment could change, and traders may prefer to exit their long positions, he advised.

According to the weekly options data, the maximum Call open interest was seen at the 27,000 strike, which could be the short-term target for the Nifty 50, followed by the 26,500 and 26,200 strikes. The maximum Call writing occurred at the 27,000 strike, followed by the 26,300 and 26,400 strikes. On the Put side, the 26,000 strike holds the maximum open interest, followed by the 26,200 and 25,500 strikes, with maximum writing at the 26,200 strike, followed by the 26,300 and 25,800 strikes.

This options data suggests that 26,500 may remain the near-term target for the Nifty 50, with 26,000 acting as support.

Bank Nifty

The Bank Nifty formed a bearish candlestick pattern on the daily timeframe, falling below the 5-day EMA (Exponential Moving Average) and closing 541 points lower at 53,834 due to profit booking after a sharp rally of almost 3,800 points in the previous fourteen consecutive sessions.

On the weekly scale, it formed a small-bodied candle with a long upper shadow, indicating selling pressure at higher levels. The index was up just 41 points, but the structure of higher highs and higher lows has remained intact for the past two weeks, indicating an overall bullish stance.

"Now, the index has to hold above the 53,750 zone for an upward move towards 54,250 and then 54,467 levels, while on the downside, support is seen at 53,500 and then at 53,357 levels," said Chandan Taparia, Senior Vice President and Analyst-Derivatives at Motilal Oswal Financial Services.

Volatility remained low, dropping to a fresh two-month low, which favours the bulls. The India VIX, the fear indicator, was down 0.33 percent to 11.96 from 12 levels, and for the week, it dropped by 6.47 percent.

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