The Nifty 50 closed off its day’s low with a loss of nearly half a percent on December 9, taking support at the 50-day EMA (25,700) and bouncing back above the 25,800 zone, while the Bank Nifty outperformed the benchmark index and recouped almost all losses to close flat. The India Volatility Index (VIX) sustained below all key moving averages, favouring the bulls.
The Nifty 50 remained below the short-term moving averages, though it did take support at the 50-DEMA on a closing basis. The momentum indicators weakened further; hence, short-term caution is likely. If the index decisively closes and sustains below the 50-DEMA in the upcoming sessions, 25,500 will be the support level to watch. On the higher side, 25,900–26,000 can act as resistance, followed by 26,100–26,200 as the key hurdle, experts said.
The Nifty 50 opened lower at 25,867 and corrected to 25,728 intraday before showing some recovery. The index closed at 25,840, down 121 points, and formed a bearish candle with upper and lower shadows on the daily charts along with a lower-high, lower-low structure, indicating weakness amid volatility.
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, such formations after a reasonable decline or near key supports often act as a short-term bottom reversal pattern.
He feels the underlying trend of the Nifty remains weak. “However, any sustainable bounce-back from near the crucial support of 25,700 could possibly open more upside towards the 26,100–26,200 levels in the near term,” he said.
Weekly options data indicated that the Nifty 50 is likely to trade in the 25,500–26,000 range in the short term.
The maximum Call open interest was seen at the 26,000 strike, followed by the 26,500 and 26,100 strikes, with the maximum Call writing at the 26,000, 25,900, and 25,800 strikes. On the Put side, the 25,500 strike holds the maximum open interest, followed by the 25,400 and 25,800 strikes, with the maximum Put writing at the 25,400, 25,800, and 25,500 strikes.
Bank Nifty
The Bank Nifty performed better than the Nifty 50, recovering 340 points from the day’s low and bouncing back above 59,000 to finish at 59,222, down just 16 points. The banking index formed a bullish candle on the daily timeframe and closed above the 20-day EMA, raising hopes of further recovery, though the RSI and MACD signal caution.
The index formed support near the 38% Fibonacci retracement level taken from the November 7 low to the record high of 60,118 on December 1.
“Immediate support is at 59,000, with positional support at 58,750 near the hourly 200 EMA. One should turn bullish only if the index closes above its 10-day EMA near 59,400,” Vatsal Bhuva, Technical Analyst at LKP Securities, said.
Resistance levels are placed at 59,500 and 59,800, keeping the range between 58,750–59,500, he added.
Meanwhile, the India VIX fell 1.55 percent to 10.95 after a day of sharp rally, sustaining below all key moving averages, which remains favourable for bulls.
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