Technical View: Momentum indicators signal caution, Nifty falling convincingly below 20 DSMA can strengthen bears but VIX falls sharply

Nifty Outlook for November 26

Bears maintained control over the market for the third consecutive session, driving the Nifty 50 down by a third of a percent on November 25, the expiry day for the November series contracts. However, the sharp fall in the VIX raised hopes for a potential bullish comeback. Even the larger-degree bullish pattern of higher tops and higher bottoms remains intact. Bank Nifty—the index comprising banking stocks that carry significant weightage in the Nifty 50—remained rangebound and sustained above the previous week’s low of 58,600 despite a three-day correction, in fact outperforming the benchmark index.

The Nifty 50 moved closer to the support zone of 25,850, which coincides with the 20-day EMA, the midline of the Bollinger Bands, and last week's low. If the index falls and sustains below this level, 25,700 and 25,500 are the next downside levels to watch. However, if it holds above this zone, it could open the door for 26,000–26,100 in the short term, experts said.

The Nifty 50 made several attempts to hold above the psychological 26,000 mark but failed due to persistent selling pressure. The index touched an intraday high of 26,033 in the afternoon but immediately lost momentum, wiping out all gains in the last hour of trade and closing at 25,885, down 75 points.

The index formed a bearish candle on the daily charts, continuing its lower-high, lower-low structure for the third straight session. The MACD showed a negative crossover, with the histogram falling below the zero line, while the RSI dropped to 54.4 with a bearish crossover—signals of caution and consolidation.

“A clear move above 26,000 is now essential to spark short covering and pave the way toward 26,200. At present, the index is precariously positioned near its 21-DMA at 25,850. Slipping below this support could accelerate the downside toward 25,700,” said Nilesh Jain, Head – Technical and Derivatives Research (Equity) at Centrum Broking.

According to him, the broader trend remains bullish, and a buy-on-dip strategy is likely to work as long as the Nifty holds above its 50-DMA, currently positioned near 25,490.

Weekly options data suggested that 26,000 is likely to be the crucial level for further direction in the Nifty 50, with resistance at 26,200 and support at 25,500.

The 26,000 strike holds the maximum Call open interest, followed by the 26,500 and 26,200 strikes, with the highest Call writing at the 26,000, 26,500, and 26,200 strikes. The maximum Put open interest was seen at the 26,000 strike, followed by the 25,500 and 25,400 strikes, with the maximum Put writing at the 25,400, 25,500, and 26,000 strikes.

Bank Nifty

The Bank Nifty traded within the previous day’s range and closed 15 points lower at 58,820. The index formed a bearish candle with an upper shadow on the daily timeframe, indicating consistent pressure at higher levels. However, it stayed well above all key moving averages, signalling that the broader trend still favours the bulls.

Momentum indicators suggested caution in the short term. The RSI slipped to 62.73 with a negative crossover, while the MACD turned bearish, with its histogram remaining below the zero line.

“These technical readings suggest the index may trade in a sideways to mildly bearish trend over the next two to four sessions, with a potential retracement toward the 20-day EMA at 58,300–58,400,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

According to him, immediate support is seen at 58,300, resistance remains at 59,200, and positional support lies near 58,000.

Meanwhile, the India VIX—the fear index—plunged 7.5 percent to 12.24, extending its downtrend for another session and falling below the 20-DSMA, signalling some comfort for bulls. A sustained decline below the 12 zone could provide further comfort.

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