Technical View: Further rally depends on 26,000 as momentum holds; VIX comforts Nifty bulls, Bank Nifty defends 60,500

Nifty outlook for February 12

• 26,000 expected to be a crucial resistance zone
• Imediate support placed at 25,900
• Staying VIX below the 12 zone can keep bulls in a better position
• FIIs gradually buying Indian equities

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The Nifty 50 maintained its uptrend for the fourth consecutive session despite consolidation and continued forming higher highs and higher lows for three days in a row on February 11. The momentum indicators maintained buy signals, while the moving averages retained an upward bias, with the 10-day EMA surpassing the 50-day EMA after crossing the 20-day and 100-day EMAs earlier this week.

Meanwhile, the fear gauge, India VIX, also maintained its downtrend and remained below all key moving averages, falling 1.01 percent to 11.55, which is gradually adding comfort for bulls. Staying below the 12 zone can keep bulls in a better position.

Further, foreign institutional investors (FIIs) have also gradually been buying Indian equities, keeping the current week's and month's flows in the green zone so far.

Hence, according to experts, the ongoing consolidation is expected to witness a strong breakout soon. Once the index convincingly surpasses and sustains above the psychological 26,000 zone, a rally toward 26,100–26,200 cannot be ruled out, while the immediate crucial support is placed at 25,900–25,800.

The Nifty 50 opened higher at 25,997 and hit an intraday high of 26,009 in early trade, but thereafter could not sustain above the psychological level. The index remained range-bound and finished at 25,954, up 19 points.

On the daily timeframe, the Nifty formed a small-bodied red candle with a lower shadow, highlighting buying interest at lower levels and continued support-based demand.

Despite the muted move, the benchmark index showed resilience as bulls strongly defended the previous day’s low zone of 25,910–25,900. “Going ahead, the immediate resistance for Nifty is placed in the 26,000–26,050 zone. Any sustainable move above this zone could result in Nifty extending its pullback towards 26,200, followed by 26,400 in the short term,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.

On the downside, the 25,850–25,800 zone is likely to act as a strong support area, he added.

The weekly options data indicated that 26,000 is expected to be a crucial resistance zone, which was tested intraday on Wednesday, with immediate support at 25,900. The maximum Call open interest was observed at the 26,000 strike, followed by the 26,100 and 26,500 strikes, with maximum Call writing at the 26,000, 26,150, and 26,100 strikes. On the Put front, the 25,900 strike holds the maximum Put open interest, followed by the 26,000 and 25,500 strikes, with maximum Put writing at the 25,900, 26,000, and 25,950 strikes.

Bank Nifty

The banking index remained consolidative with range-bound trading for another session, especially after Monday's gap-up trade. In fact, the index could not fill the said bullish gap on a closing basis, though it was partially filled intraday, which is positive. Hence, the trend remains up.

Further, the index remained above all key moving averages, with all of them trending northward. The momentum indicators also maintained buy signals, with the RSI rising to 60.68. The MACD sustained its upward bias with a further uptick in the histogram.

The Bank Nifty rose 119 points (0.2 percent) to 60,745 and formed a bullish candle with a lower shadow (similar to the candles of the previous couple of sessions) on the daily charts.

Further, the index continues to exhibit strength after a decisive breakout above the falling trendline on the daily chart. “The recent consolidation near 59,500–60,000 appears healthy, with price holding above the breakout zone, indicating acceptance at higher levels,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

According to him, as long as the index sustains above 59,500, a buy-on-dips strategy remains favourable, with immediate support near 59,500 and stronger support placed around the 58,000 level.