The Nifty 50 has decisively broken below its short-term moving averages (10- and 20-day EMAs) and the midline of the Bollinger Bands, accompanied by higher volumes compared to the previous three sessions. The index closed nearly 0.4 percent lower on December 29, ahead of the monthly F&O expiry scheduled on December 30. Momentum and technical indicators weakened, signalling caution for Nifty bulls.
The next immediate key support is placed at 25,800, which coincides with the 50-day EMA. The index has defended this level on a closing basis multiple times during the current month. If the index breaks below it, the 25,700–25,650 zone (December lows) will be the next levels to watch on the downside. However, holding above 25,800 can raise the possibility of a rebound toward 26,000–26,300 again, experts said.
The Nifty 50 opened higher at 26,063 and climbed to 26,107 but erased all its gains within the initial hour and traded lower for the remaining part of the session. It touched an intraday low of 25,920 in late trade before closing at 25,942, down 100 points (0.38 percent).
The index formed a bearish candle with a minor upper shadow on the daily charts, along with a lower high–lower low structure, indicating weakness. The RSI dropped below the 50 mark to 49.06, while the MACD turned bearish, with the histogram falling below the zero line.
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the short-term trend of the market continues to remain weak amid choppy movement.
“Nifty is expected to find support around the 25,850–25,800 levels in the short term before bouncing back again from the lows. Immediate resistance is placed at 26,100,” he said.
However, the larger-degree higher high–higher low formation remains intact since the middle part of this month. The present weakness could be in line with the formation of a new higher bottom. This higher bottom reversal pattern needs confirmation in the upcoming sessions, Shetti added.
On the monthly options front, the maximum Call open interest was placed at the 26,000 strike, followed by the 26,100 and 26,200 strikes, with the maximum Call writing seen at the 26,000, 25,950, and 26,100 strikes. On the Put side, the 26,000 strike holds the maximum Put open interest, followed by the 25,900 and 25,800 strikes, with the maximum Put writing at the 25,900, 25,850, and 25,950 strikes.
The above options data also suggest that the 26,000–26,200 zone is expected to act as resistance for the Nifty 50, while support is placed at the 25,900–25,800 levels.
Bank Nifty
The Bank Nifty remained below its short-term moving averages and the midline of the Bollinger Bands, falling 79 points to 58,932 amid volatility. The short-term moving averages trended down, while the index formed a bearish candle with upper and lower shadows, indicating volatility and short-term uncertainty.
“On the upside, 59,800 and 60,115 will act as short-term hurdles, while the 58,700–58,800 zone will act as a demand area,” said Hrishikesh Yedve, AVP – Technical and Derivative Research at Asit C Mehta Investment.
Therefore, short-term traders are advised to adopt a buy-near-support and sell-near-resistance approach, he added.
Momentum indicators remained weak, with the RSI at 48.5, and the MACD and Stochastic RSI sustaining below their reference lines. Further weakness in the histogram also signalled bearish sentiment in the Bank Nifty in the short term.
Meanwhile, the India VIX, the fear index, rebounded and spiked 6.23 percent to 9.72 after consistent weakness over the past several sessions, which caused some discomfort for bulls. However, as long as it sustains below the 12–13 zone, bulls may not be at major risk, experts said.
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