Technical View: Nifty gains for 4th day but holding 25,000 crucial for sharp breakout, Bank Nifty underperforms

Nifty Outlook for August 20

The Nifty 50 maintained its bullish momentum for another session, rising four-tenths of a percent while facing strong resistance at the 25,000 mark on August 19. Technical and momentum indicators remained supportive, but the index needs to deliver a sharp breakout above 25,000 for a further upward journey toward 25,250—a crucial zone for negating the lower highs-lower lows structure observed since the start of July. However, Monday’s low of 24,850 is expected to act as immediate support, followed by 24,750 as the key support level, according to experts.

The Nifty 50 started Tuesday’s trade on a positive note and sustained the uptrend throughout the session, hitting a day’s high of 25,013. The index rose 104 points to finish at 24,981, forming a bullish candle within the previous day’s trading range—indicating rangebound action below the 25,000 hurdle. The index extended upward move for fourth consecutive session.

The index sustained above all key moving averages and the midline of the Bollinger Bands, with the 20-day EMA line inclining upward and the 50-day EMA on the verge of tilting upward—both of which are positive signs. Furthermore, the MACD maintained a positive crossover (though still below the zero line), with the histogram strengthening further. The RSI climbed to 55.12, indicating a healthy trend.

The sharp upside opening gap from Monday remains intact even two sessions after its formation. This gap could now be considered a bullish breakaway gap, which is typically formed at significant bottom reversals. Hence, according to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, one may expect Nifty to move up further in the short term and could reach an upside target of 25,300 in the near term.

Immediate support is placed at 24,850, he said.

Even the weekly options data suggests that 25,000 is expected to be a key resistance zone. Above this, 25,500 is the level to watch, with support located in the 24,900–24,800 zone.

The maximum Call open interest was seen at the 25,000 strike, followed by the 25,500 and 25,200 strikes, with the maximum Call writing at the 25,500 strike, followed by 25,300 and 25,000. On the other hand, the 24,900 strike holds the maximum Put open interest, followed by the 25,000 and 24,800 strikes, with maximum Put writing at the 24,900 strike, followed by 25,000 and 24,950 strikes.

Bank Nifty

The Bank Nifty continued to underperform the Nifty 50, though it rose 130 points to close at 55,865. The index formed a bullish candle with an upper shadow on the daily timeframe and managed to close above the 20-day and 50-day EMAs as well as the midline of the Bollinger Bands. The trend appears to be improving, as the MACD gave a bullish crossover with the histogram turning positive, and the RSI inched up further to 49.55.

Buying demand in the last few sessions has emerged from the 100-day EMA (55,000), which will be a crucial support zone.

“We expect the index to extend its consolidation in the range of 54,800–56,300. Only a movement beyond this range will signal the next directional move,” analysts at Bajaj Broking said.

According to them, the key support area lies between 54,800 and 55,000—a region that aligns with the 100-day exponential moving average (EMA) and key Fibonacci retracement levels from the previous upward move. “A breach below 54,800 will open downside toward 54,000 levels. On the higher side, resistance is seen around the 56,000–56,300 range, which corresponds to the recent breakout area and the 50% retracement of the entire decline (57,628–54,905),” they added.

Meanwhile, the volatility index, India VIX, also known as the fear gauge, dropped sharply by 4.46 percent to 11.79, indicating a less uncertain environment and more stable market conditions.