Technical View: Fall towards 50-DEMA level can't be ruled out if Nifty breaks psychological mark of 25,000

Nifty Outlook for Tuesday

The Nifty 50 continued its downward journey for the fourth consecutive session on July 14, closing a third of a percent lower amid choppy trade. The index managed to defend the 25,000 zone during the session. If it continues to hold this key psychological level, the 25,200–25,300 levels are to be watched. However, a decisive fall below it could drag the index down toward 24,900, which coincides with the 50-day EMA as well as an upward-sloping support trendline, according to experts.

The Nifty 50 opened flat and remained under pressure throughout the session. It tested an intraday low of 25,002 in the afternoon before closing at 25,082, down 68 points, and forming a bearish candle with a minor lower shadow on the daily charts.

Technically, this market action indicates a continuation of the downward correction with slower momentum. The lower highs–lower lows formation continued for the third consecutive session, while momentum indicators remained weak, with the RSI sustaining below the 50 mark at 46.66, and the MACD histogram weakening further.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the short-term trend of the Nifty continues to be weak, with the possibility of further consolidation and rangebound action in the coming sessions.

"Crucial lower supports to be watched are around 25,000–24,900, and there is a probability of an upside bounce from these levels. Immediate resistance to watch is at 25,200," he said.

However, the larger degree bullish pattern of higher tops and bottoms remains intact on the daily chart. Hence, the present weakness could be part of a new higher bottom formation. Still, there is no confirmation of any higher bottom reversal at the lows, Nagaraj added.

The weekly options data indicated that the Nifty 50 is expected to trade in the 24,900–25,500 range in the near term.

The maximum Call open interest was placed at the 25,500 strike, followed by 25,300 and 25,400 strikes. The 25,000 strike holds the maximum Put open interest, followed by 25,100 and 24,900 strikes.

On the writing front, the maximum Call writing was observed at the 25,100 strike, followed by 25,200 and 25,800 strikes. The 24,900 strike saw the maximum Put writing, followed by 25,100 and 25,050 strikes.

Bank Nifty

The Bank Nifty outperformed the benchmark Nifty 50, rising 11 points to 56,765, and formed a Doji-like candlestick pattern on the daily timeframe, signalling indecision among bulls and bears. The index continued to defend the 20-day EMA (56,734) and the midline of the Bollinger Bands on a closing basis for another session. Experts believe that breaking these levels could bring more selling pressure in the banking index, but until then, consolidation and rangebound trading may continue.

Momentum indicators are currently pointing towards a sideways undertone, suggesting a lack of clear directional bias in the short term.

Regarding crucial levels, Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities said, "The zone of 56,550–56,500 is likely to act as immediate support for the Bank Nifty index. A breakdown below this zone could trigger further downside pressure in the near term."

On the upside, the index faces strong resistance in the 57,000–57,100 zone, which will act as a crucial hurdle. A sustained move above this zone will be essential to reignite bullish momentum and pave the way for higher levels, he added.

Meanwhile, the India VIX extended its upward journey for another session but still remained in the lower zone, rising 1.38 percent to 11.98.