Technical View: Further rally in Nifty toward 26,000 needs trendline breakout; elevated VIX signals caution, Bank Nifty eyes 61,500

Nifty outlook for February 24

• Monthly options data suggest that Nifty may remain in the 25,500–26,000 range in the short term
• Further rally in Nifty toward 26,000 needs trendline breakout
• Elevated VIX signals caution
• Bank Nifty eyes 61,500

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The Nifty 50 extended its upward journey for another session, rising a little more than half a percent on February 23, following the Supreme Court's ruling against Trump tariffs. However, participants are awaiting more clarity regarding the revised strategy of US President Donald Trump, who increased the global tariff rate to 15 percent from 10 percent over the weekend. The Nifty 50 closed above all key moving averages, but sustainability remains the key factor to watch.

Further, the benchmark index needs to break out of the falling resistance trendline (adjoining the February 3 and February 19 highs), which coincides with Monday's high near 25,800. A sustained move above this level can open the door for 25,900–26,000 (previous swing highs). Until then, rangebound trading may continue, with crucial support at 25,600, experts said.

The Nifty 50 opened 100 points higher at 25,678 and climbed to 25,771 in early trade but could not sustain those gains due to gradual profit booking. The index touched an intraday low of 25,609 before recovering in late trade to close at 25,713, up 142 points (0.55 percent).

The index traded higher throughout the session and formed a small-bodied bullish candle with upper and lower shadows on the daily timeframe, indicating indecision between bulls and bears at higher levels.

Momentum indicators showed improvement, with the RSI at 51.54 inching toward the reference line. The MACD remained above the signal line and the zero line, with strength in the histogram. All this indicates improving momentum, though confirmation from price action is still required.

"A decisive move above 25,800 is crucial to trigger short covering, which could propel the index towards 26,000. On the downside, immediate support is placed at the 21-DMA near 25,570," said Nilesh Jain, VP and Head of Technical and Derivative Research at Centrum Finverse.

With the February monthly F&O expiry approaching, he expects heightened volatility in the index.

Meanwhile, the India VIX, also known as the fear index, remained in an elevated zone despite a small correction after a surge in the previous couple of sessions, consistently signalling caution and discomfort for bulls. The VIX was down 1.36 percent at 14.17. A sustained move below 12 is necessary for bulls to regain firm control.

The monthly options data suggest that the Nifty may remain in the 25,500–26,000 range in the short term, as a decisive close on either side of the range can provide firm direction to the Nifty 50.

The maximum Call open interest was placed at the 26,000 strike, followed by the 25,800 and 25,700 strikes, with the maximum Call writing at the 25,750, 26,000 and 25,700 strikes. Meanwhile, the 25,500 strike holds the maximum Put open interest, followed by the 25,000 and 25,600 strikes, with the maximum Put writing at the 25,700, 25,600 and 25,650 strikes.

Bank Nifty

The Bank Nifty also extended gains but underperformed the Nifty 50 and could not close above 61,500. It formed a bullish candle with an upper shadow on the daily charts and maintained a higher-high, higher-low structure. This price action suggests continuation of the positive trend, though there was pressure at higher levels.

The banking index rose 92 points to 61,264, while traded volume was the highest since the Covid period. The index traded well above all key moving averages (20-, 50-, 100- and 200-day EMAs), and all these moving averages are trending upward. The RSI at 59.63 sustained its bullish crossover. The MACD also maintained a positive crossover and upward bias. All this indicates strengthening bullish momentum.

"Going ahead, the region of 61,500–61,600 will act as a major hurdle for the index. A sustained breakout above 61,600 could unleash strong upside momentum toward 62,200, and further toward 62,600," said Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities.

On the flip side, immediate support lies in the 60,800–60,700 zone. Holding above this zone will keep the short-term structure positive, while a breakdown below it may trigger further downside pressure, he added.