The Nifty 50 maintained its upward journey and rallied nearly 0.6 percent for the second consecutive session on December 12. With Friday's rally, the index closed well above the short-term moving averages as well as the midline of the Bollinger Bands (all of which coincide with the 25,950–26,000 zone), signalling strength in the market. In addition, the India VIX falling to a two-month low also boosted confidence among bulls, though the Bank Nifty is yet to pick up momentum.
According to experts, if the Nifty 50 sustains above the psychological 26,000 zone, 26,200 and then the record high above 26,300 cannot be ruled out in the coming week. However, the 25,900–25,800 zone is expected to act as an immediate support.
The Nifty 50 opened higher and maintained its upward trajectory throughout the session, rising 148 points (0.57 percent) to close at 26,047 and forming a bullish candle on the daily charts. The momentum indicator RSI also inched higher to 54.4, though still slightly below the reference line, and the Stochastic RSI turned bullish.
The MACD inclined marginally but remained below the reference line, while the bearish momentum continued to fade in the histogram, though it is still below the zero line.
The immediate resistance of the down-sloping trendline is now placed at the edge of a decisive breakout, which is a positive indication. The larger-degree positive chart pattern of higher tops and bottoms remains intact.
The recent swing low of around 25,693 can be considered a new higher bottom of the pattern, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
Nifty fell 0.53 percent for the week, extending its weakness for another week. The index formed a small bear candle with a long lower shadow on the weekly chart. A similar candle pattern has formed over the last two weeks, signalling the emergence of sharp buying in the market near immediate supports.
According to Nagaraj, the underlying trend of the Nifty continues to be positive. “The next upside levels to watch are around 26,300–26,400. Immediate support is placed at 25,900,” he said.
Weekly options data indicated that the Nifty 50 is expected to face resistance at 26,300–26,500 in the short term, with support at the 25,900–25,800 levels.
The maximum Call open interest was observed at the 26,500 strike, followed by the 26,200 and 26,300 strikes, with maximum Call writing at the 26,050, 26,300, and 26,500 strikes. On the Put side, the 26,000 strike holds the maximum open interest, followed by the 25,800 and 25,900 strikes, with maximum Put writing at the 26,000, 25,950, and 25,900 strikes.
Bank Nifty
The Bank Nifty also gained for another session, climbing 180 points (0.3 percent) to 59,390, but it could not close above the 59,400–59,500 zone, which remains a crucial level for a further upward move.
The index sustained above all key moving averages but formed a Doji candlestick pattern on the daily timeframe, indicating indecision among bulls and bears. The RSI also climbed to 58.21 but still remained below the reference line, while the Stochastic RSI showed a bullish breakout. The MACD maintained its bearish crossover, though weakness in the histogram faded slightly.
Overall, the banking index has been consolidating within the 59,440–58,800 band for the last three trading sessions. Although it attempted an intraday breakout above this range on Friday, it failed to sustain and closed back inside the range, suggesting the need for stronger conviction before a directional move emerges.
“The zone of 59,400–59,500 is likely to act as an immediate resistance area for the index. A sustained move above 59,500 could lead to Bank Nifty extending its pullback towards 59,800, followed by 60,100,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
On the downside, the 58,900–58,800 zone is likely to act as strong support for the index, he added.
Meanwhile, the India VIX, also known as the fear gauge, dropped further to 10.11 — the lowest closing level since October 10 — down 2.81 percent, providing strong comfort for bulls. On a weekly basis, it has been falling for the third consecutive week, down 2.01 percent.
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