The Nifty 50 extended its southward journey and remained below the short-term moving averages (10- and 20-day EMAs) for the third consecutive session on December 10, hitting a one-month low. It also moved closer to the 50-day EMA (25,700) and the lower line of the Bollinger Bands for the second straight session. Weakness in momentum indicators signalled that bears are gradually gaining strength. The Bank Nifty also closed below short-term moving averages, indicating caution, although the VIX remained near lower zones.
If the Nifty 50 convincingly breaks below 25,700, bears may gain further strength and drag the index toward 25,500–25,400, the key support levels. However, in case of a recovery, the 25,950–26,000 zone will be important to watch, experts said.
The index opened higher and climbed to 25,948 intraday but lost all those gains in late-morning deals and traded lower for the rest of the session. It fell 82 points (0.32 percent) to 25,758, its lowest closing level since November 11, and formed a bearish candle with an upper shadow on the daily timeframe, signalling weakness and a sell-on-rise opportunity, although volume was lower than in the previous session.
Nifty is currently placed near the support zone of 25,700–25,600 levels (the previous upside opening gap of November 12 and also the 10-week EMA). A breakdown of this support could potentially trigger broad-based weakness in the market, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
However, any bounce-back from here could face resistance around the 25,900–26,000 levels, he added.
Weekly options data also indicated that the Nifty 50 is expected to face resistance at 25,900–26,000 levels, with support at 25,500.
Maximum Call open interest was seen at the 26,000 strike, followed by the 25,900 and 26,100 strikes, with maximum Call writing at the 26,000, 25,900, and 26,100 strikes. The 25,500 strike holds the maximum Put open interest, followed by the 25,800 and 26,000 strikes, with maximum Put writing at the 25,500, 25,750, and 25,300 strikes.
Bank Nifty
The banking benchmark index, Bank Nifty, closed below the midline of the Bollinger Bands and the 20-day EMA for the first time since September 30, falling 262 points (0.44 percent) to 58,960. The index also finished below the 59,000 zone for the first time since November 25. Momentum indicators—RSI (52.2), Stochastic RSI, and MACD—also showed a bearish undertone.
“Immediate support lies at the 58,750–58,775 zone, aligned with the hourly 200 EMA, while resistance is seen near 59,300 at the 10-day EMA. A breakdown below this support may intensify selling toward the 50-day EMA around 58,100,” said Vatsal Bhuva, Technical Analyst at LKP Securities.
Only a reclaim of the 10-day EMA along with a bullish RSI crossover would revive optimism, he added.
Meanwhile, the India VIX—the fear index—dropped 0.37 percent to 10.91, extending its downtrend for another session and remaining well below short-term moving averages. This is favourable for the bulls, but sustaining the VIX near lower zones may also increase the possibility of a sharp market move on either side.
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