Technical View: Nifty rebounds but sustainability above 200 DEMA key for further upside; Bank Nifty claws back above 59,000 despite rising VIX

Nifty outlook for January 28

• Weekly options data suggests Nifty likely to trade in 25,000–25,500 range in short term
• Sustainability of above 200 DEMA crucial for further uptrend
• Consolidation likely to continue, with immediate support at 25,000–24,900

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The Nifty 50 saw a strong rebound after taking support at the 25,000–24,900 zone and climbed above the 200-day EMA (Exponential Moving Average), rising half a percent on January 27. However, the sustainability of this rally above the 200 DEMA (25,160) is important for a further uptrend toward the 25,350–25,450 zone. Until then, consolidation is likely to continue, with immediate support at the 25,000–24,900 levels, as technical and momentum indicators remain weak amid a rising VIX, according to experts.

After opening flat, the Nifty 50 remained range-bound and volatile throughout the session before closing at 25,175, up 127 points (0.51 percent). The benchmark index formed a bullish candle with upper and lower shadows on the daily charts amid significantly higher volumes, indicating some positive trend along with volatility.

The index is still trading well below all other key moving averages (except the 200-day EMA), with short- and medium-term moving averages trending downward. The RSI inclined upward to 34.29 but remains below the signal line and near the oversold zone, which raises the possibility of a short-term pullback. The MACD is sustained below the zero and reference lines. The Stochastic RSI maintained a bullish crossover in the oversold zone. All this indicates cautious optimism.

“The markets saw a strong rebound; however, the index is not out of the woods yet, and a decisive move above 25,400 is crucial to negate the prevailing bearish setup,” said Nilesh Jain, Head – Technical and Derivatives Research Analyst (Equity Research) at Centrum Broking.

He expects the Nifty to oscillate within the broader range of 25,000–25,400 levels.

Meanwhile, India VIX cooled off sharply from its intraday highs of 16.05, but it remained in an uptrend, which continues to be a concern. It rose 1.83 percent to 14.45, sustaining well above all key moving averages.

Weekly options data suggested that the index is likely to trade in the 25,000–25,500 range in the short term.

The maximum Call open interest was seen at the 25,500 strike, followed by the 25,000 and 25,200 strikes, with maximum Call writing at the 25,000, 25,200, and 25,500 strikes. Meanwhile, the 25,000 strike holds the maximum Put open interest, followed by the 25,100 and 25,200 strikes, with maximum Put writing at the 25,000, 25,100, and 25,200 strikes.

Bank Nifty

The Bank Nifty climbed above the 59,000 zone and surged 732 points (1.25 percent) to 59,205, forming a long bullish candle on the daily timeframe, indicating strong buying interest. However, it could not close above the previous day’s high. The index outperformed the benchmark Nifty 50 and closed above the 50-day EMA but could not sustain above short-term moving averages.

The RSI rose to 48.51 but remained below the signal line. The MACD also stayed below the reference line and the zero line. All this indicates continued caution.

“The index found support near the 58,100 zone and witnessed a sharp follow-up rebound after the previous selling session, highlighting demand at lower levels. Volatility is expected to remain elevated in the coming sessions due to the Union Budget event,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

According to him, the 20-day moving average and the 59,500 zone will be crucial; a sustained close above these levels could decide the next directional move. Support is placed at 58,800, while resistance stands at 59,500.