Technical View: Healthy start to October: 25,000 marks key hurdle for Nifty's rally; Bank Nifty surges above all EMAs post RBI policy

Nifty outlook for October 3

Bulls staged a strong comeback, driving the benchmark Nifty 50 nearly 1 percent higher on October 1, marking a healthy start to the October series, especially after witnessing a downfall over the previous eight consecutive sessions. The index recouped the losses of the past three straight days and closed well above the 100-day EMA, following the RBI policy, though it still remains below short- and medium-term moving averages.

Going ahead, follow-up buying, if it comes in the upcoming sessions, needs to push and sustain the Nifty above 25,000 (the midline of Bollinger Bands) for a sharp rally toward the previous swing high of 25,450. Until then, the index may remain rangebound with immediate support at 24,600, experts said.

The Nifty 50 opened flat and gained strength after the RBI, as expected, kept the repo rate unchanged at 5.5 percent, along with revisions in the inflation and growth forecasts. The index extended its rally as the day progressed and closed at 24,836, up 225 points (0.92 percent), forming a long bullish candle on the daily charts.

The index negated the lower high-lower low structure of the previous eight sessions, though the larger-degree higher tops and bottoms remain intact, according to both daily and weekly timeframe charts. The recent swing low of 24,587 could now be considered a new higher bottom in the sequence, Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said.

The weakness in the histogram faded, though the MACD maintained its bearish crossover. The RSI rebounded to 47.23 after a consistent downfall in the past several sessions.

According to Nagaraj, the short-term trend of Nifty reversed upward firmly on Wednesday with the formation of a near-term bottom reversal pattern. "The next upside hurdles to watch are around the 25,000 mark, followed by 25,200 in the next week. Immediate support is placed at 24,600 levels," he said.

The weekly options data suggested that the Nifty 50 is expected to remain in the range of 24,600–25,000 in the near term.

The maximum Call open interest was placed at the 25,000 strike, followed by the 25,500 and 25,200 strikes, with the maximum Call writing at the 25,500, 25,000, and 24,950 strikes. On the Put side, the 24,700 strike holds the maximum Put open interest, followed by the 24,600 and 24,800 strikes, with the maximum Put writing at the 24,800, 24,700, and 24,600 strikes.

Bank Nifty

The banking stocks lent support to the market as the Bank Nifty rallied 712 points (1.3 percent) to 55,348 and formed a long bullish candle, climbing above all key moving averages as well as the midline of the Bollinger Bands in a single session with above-average volumes.

This marked a strong start to the October series, with private banks joining the rally on Wednesday.

RSI (Relative Strength Index) rose sharply from 41 to 55 over the last four sessions, indicating increasing buying momentum. The Directional Indicators (DI+ and DI-) have crossed over, signaling a potential shift in trend and strengthening bullish sentiment in the near term.

"Bank Nifty is showing resilience around key support levels, with technical indicators pointing to early signs of a trend reversal. Short-term follow-through buying could drive further upside," said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities.

According to him, the 55,500–55,600 zone will act as immediate resistance for the Index. "If the index manages to move above the level of 55,600, the pullback can extend further towards 56,000, followed by 56,300. On the downside, the zone of 55,000–54,900 will act as crucial support for the Index," he added.

Meanwhile, the volatility index, India VIX, fell sharply by 7.03 percent to 10.29 and dropped below short-term moving averages, providing strong comfort for the bulls.

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