Technical View: Bulls turn strong ahead of monthly F&O expiry, could gain more strength if Nifty reclaims 26,100; Bank Nifty at record closing high

Nifty outlook for October 28

After a day of consolidation and profit booking, the Nifty 50 bulls were back in action, helping the index test the psychological 26,000 mark intraday and close with a seven-tenth of a percent gain on October 27, ahead of the monthly derivative contracts expiry due on October 28, thanks to easing global headwinds.

The index recouped all its previous day’s losses and stayed well above all key moving averages, which continued to trend upward. Meanwhile, the RSI climbed back above the 70 zone to 71.49, and the MACD sustained its position in the bullish zone, with the histogram remaining above the zero line.

According to experts, if the Nifty 50 manages to close and sustain above the 26,000 mark, a rally toward the previous week’s high of 26,104 and the record high of 26,277 cannot be ruled out in the short term. However, the 25,800–25,700 range is expected to act as a support zone.

The index did not break its previous day’s low. In fact, it opened above 25,800 and sustained that level throughout the session, hitting an intraday high of 26,006 before closing the day at 25,966, up 171 points (0.66 percent).

The index formed a long bullish candle with a minor upper shadow on the daily timeframe, indicating a positive trend despite minor profit booking at higher levels.

“Sentiment continues to remain strong as the index sustains above the breakout point. The current setup looks favourable for a further rally in the index, with dips likely to be bought into,”
said Rupak De, Senior Technical Analyst at LKP Securities.

According to him, on the lower end, support is placed at 25,700, below which weakness might emerge. On the higher end, resistance is seen at 26,000; a decisive move or close above this level could trigger a rally towards 26,500 in the short term, he added.

The monthly options data indicated that the Nifty 50 is expected to face resistance at 26,500, with support at 25,900 in the near term.

The maximum Call open interest (OI) was seen at the 26,500 strike, followed by the 26,100 and 26,000 strikes, with the maximum Call writing at the 26,050, 26,550, and 26,350 strikes. On the other hand, the 25,900 strike held the maximum Put open interest, followed by the 25,500 and 26,000 strikes, with the maximum Put writing at the 25,900, 26,000, and 25,950 strikes.

Bank Nifty

The Bank Nifty also traded higher after a day of correction, rising 415 points (0.72 percent) to end at a record closing high of 58,114, forming a bullish candle with minor upper and lower shadows on the daily charts. The banking index traded within the previous day’s range; hence, surpassing the previous day’s high (58,233) could clear the road for a move toward 58,600.

Trading near all-time high levels, the index continues to exhibit strong bullish undertones, with all major moving averages and momentum indicators aligned in favour of the bulls.

“Going ahead, the zone of 58,500–58,600 is likely to act as a crucial resistance area for the index. A decisive breakout and sustained move above 58,600 could trigger a sharp upside rally towards 59,100, followed by 59,500 in the near term,” said Sudeep Shah, Head – Technical Research and Derivatives at SBI Securities.

On the flip side, the zone of 57,700–57,600 is expected to offer strong support, and any dip towards this area may attract buying interest, he added.

Meanwhile, the India VIX, which measures expected market volatility, spiked up to 12.72 intraday but cooled down as the day progressed, closing 2.31 percent higher at 11.86, thereby supporting the bulls.

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