The Nifty 50 snapped its four-day losing streak and also negated the lower high–lower low formation of the previous four sessions, closing above the short-term moving averages (10- and 20-day EMAs) with nearly six-tenths of a percent gains after a gap-up opening on December 19. This rally was accompanied by nearly double the volume compared to the previous session and a record low VIX, which is likely to offer some reassurance to bullish sentiment.
The index is now trading well above all key moving averages but needs to scale convincingly above the midline of the Bollinger Bands on a closing basis, which coincides with the 26,000 zone, to gain strong momentum for a move toward a record high above 26,300. Until then, there could be a continuation of consolidation, with 25,800–25,700 acting as support, experts said.
The Nifty 50 saw a gap-up opening at 25,911 and maintained an upward journey throughout the session to hit the day’s high of 25,993, despite range-bound trading. The index rose 151 points (0.58 percent) to close at 25,966 and formed a bullish candle with minor upper and lower shadows on the daily charts, signalling a positive trend.
The RSI also scaled above the 50 zone to 52.07 with a positive crossover, and the Stochastic RSI, too, climbed above the reference line. The MACD maintained a bearish crossover, but histogram weakness faded.
On the weekly chart, the Nifty 50 moved within the previous week’s range and declined for the third consecutive week, forming a Doji-like candle, indicating indecision. However, the index defended the upward-sloping support trendline.
“The immediate hurdle is placed near the 21-DMA at 26,000, and a sustained move above this zone could lead to short covering, potentially lifting the index towards 26,200,” said Nilesh Jain, Head – Technical and Derivatives Research Analyst (Equity Research) at Centrum Broking.
According to him, given the recent rebound and a breakout above the falling trendline, a Santa rally in the coming week looks possible, which may propel the Nifty towards the 26,200 mark.
On the downside, key support is positioned around 25,700, he added.
Weekly options data suggest that the Nifty 50 is expected to face a hurdle in the 26,000–26,200 zone, with support at the 25,900–25,800 levels.
The maximum Call open interest was placed at the 26,000 strike, followed by the 26,200 and 26,100 strikes, with maximum Call writing seen at the 26,200, 26,000, and 26,400 strikes. Meanwhile, the 25,900 strike holds the maximum Put open interest, followed by the 25,800 and 26,000 strikes, with maximum Put writing at the 25,900, 25,950, and 26,000 strikes.
Bank Nifty
The Bank Nifty underperformed the benchmark Nifty 50, rising 156 points (0.27 percent) to 59,069, supported by above-average volumes after a three-day loss. It formed a Doji-like candlestick pattern on both the daily and weekly timeframes, signalling indecision among bulls and bears.
The index tested short-term moving averages intraday but could not close above the same, while continuing to defend the rising support trendline. Momentum indicators also need to align with the rebound.
For the week, the banking index fell 0.54 percent, extending its downtrend and maintaining a lower high–lower low structure for the second straight week.
“Technically, on the daily chart, Bank Nifty defended the low of an inverted hammer candle at 58,712 and formed a Doji candle on both the daily and weekly scales, indicating uncertainty. As long as the index holds above 58,712, a relief rally could continue,” said Hrishikesh Yedve, AVP, Technical and Derivative Research at Asit C Mehta Investment Intermediates.
However, a firm break below 58,712 could resume weakness towards the 58,450–58,000 zone, he added.
Meanwhile, the fear index, India VIX, hit a fresh record closing low for the third consecutive session, declining 1.91 percent to 9.52 on Friday and 5.79 percent for the week, extending its downtrend for four consecutive weeks. As a result, bulls remain in the comfort zone, but consistently low VIX levels signal the possibility of sharp market moves. Additionally, there appears to be a double-bottom-like formation on the weekly scale; confirmation in the following week could increase the chances of a spike in VIX.
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