Technical View: Strong sentiment signals Nifty bullls may eye 25,900-26,000 on Muhurat Trading, Bank Nifty could test 58,500

Nifty Outlook for Muhurat Trading on October 21

The Nifty 50 bulls gained further strength after a gap-up opening, rallying half a percent and extending their uptrend and Diwali celebrations for the fourth consecutive session on October 20 — a day before the Muhurat Trading session scheduled for an hour on October 21. The index not only scaled above the long-standing bearish gap (created on October 3, 2024) but also closed above the key resistance level of 25,800, aided by gains in banks, technology stocks, and index heavyweight Reliance Industries — despite some profit-booking-led pressure at higher levels.

Technical and momentum indicators remained strong, with the RSI rising to 71.8 and the MACD continuing its upward trajectory with an advancing histogram. The higher high–higher low structure also remains intact. Hence, the index is expected to face resistance in the 25,900–26,000 zone in upcoming sessions, despite possibilities of intermittent consolidation or minor corrections. Sustaining above this zone could open the door for a record high of 26,277, while support is seen at 25,600–25,500, according to experts.

The Nifty 50 opened over 100 points higher at 25,825, trading in a narrow range of 25,926–25,788 during the session before closing at 25,843 — up 133 points or 0.52 percent. The index formed a small bullish candle with a long upper shadow and minor lower shadow on the daily timeframe, indicating a positive bias despite pressure at higher levels.

"Though there was some profit-taking at higher levels, the overall sentiment is likely to remain strong, with the potential to reach 26,000–26,200 in the short term," said Rupak De, Senior Technical Analyst at LKP Securities.

He added that the technical setup remains positive as long as the index stays above 25,700, below which it may slip back into consolidation.

Weekly derivative data indicated that the Nifty 50 is likely to face resistance in the 25,850–25,900 zone, with support in the 25,800–25,750 range.

The maximum Call open interest was seen at the 25,850 strike, followed by the 25,900 and 26,000 strikes. Maximum Call writing was observed at the 25,850, 25,900, and 25,950 strikes.

On the Put side, the 25,800 strike held the highest open interest, followed by the 25,850 and 25,750 strikes. Maximum Put writing was seen at the 25,800, 25,850, and 25,900 strikes.

Bank Nifty

The Bank Nifty closed above the 58,000 mark for the first time, ending at 58,033 with strong volumes — up 320 points or 0.55 percent. It formed a bullish candle with an upper shadow on the daily chart, indicating a positive trend with some pressure at higher levels.

"In sync with the festive optimism surrounding Diwali, the Bank Nifty index has maintained its bullish tone, riding on strong sectoral momentum and investor confidence. The index is currently trading at an all-time high, which suggests strong momentum," said Sudeep Shah, Head – Technical Research and Derivatives at SBI Securities.

According to him, the support zone of 57,700–57,600 will be crucial in the near term.

"As long as the index sustains above the 57,600 mark, the upward momentum is expected to continue. On the upside, Bank Nifty is likely to test the 58,500 level, with a potential extension towards 58,900 in the short term," he added.

Meanwhile, the India VIX, the volatility index, declined 2.32 percent to 11.36, continuing to hover near lower zones — a sign of comfort for bulls.

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